New York (HedgeCo.net) – The high risk Iraqi Babylon Fund reported its Q1 resullts, showing a modest loss of 2.8% in the hedge fund’s price over the three-month period. In the same period the Iraqi stock market lost -7% in the wake of postelection jitters and rumours, the hedge fund said in its Fact Sheet for March 2010.

“No Iraqi banks have closed their doors last few years (compared to hundreds in the US), a larger, stronger, even more trustworthy private bank system is a core necessity to grow confidence further among the Iraqi public – a country that only five years ago was a dictatorial socialistic planning economy.” Bob Torkelund, Director at the Babylon Fund, said, “We expect that at least one bank out of five will struggle to reach the minimum threshold in time.”

The Babylon Fund is an open-ended investment fund investing into relatively large-cap Iraqi-dependant securities, mainly listed on the Iraqi stock exchange in Baghdad. The investment process is mainly top-down driven.

“During the month we trimmed our position in the oil company DNO further, sold out large parts of our 5.8% 2028 Iraqi bonds, rotating into existing Iraqi banks, buying on dips. Thereby our equity exposure was raised further, on the expense of cash and bond allocations. These moves reflect our view that present market weakness and wait-and-see stance among investors should be regarded as good timing for searching for buying opportunities.” Torkelund concluded.

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