Struggling high street banks have recently been added to the list of Crispin Odey ‘s bearish wagers.
In a letter to investors Crispin Odey, the London-based billionaire hedge fund manager and the founding partner of Odey Asset Management who made his fortune shorting banking shares during the 2008 financial crisis and now he is at it again.
“serial lagging sector, luring every year value investors to their deaths”
CRISPIN ODEY (describing banking)
Crispin Odey is taking a very bearish outlook on banking
Crispin Odey is known to be somewhat of a colorful character in the hedge fund world. But it was what Crispin Odey recently wrote, in a letter to investors that has raised eyebrows. Crispin Odey described banking as a “serial lagging sector, luring every year value investors to their deaths”.
Crispin Odey ‘s bearish wagers list is likely to include high street banks.
With such colorful language used by the hedge fund manager to describe the banking sector, you can be fairly confident thinking that high street banks are part of Crispin Odey ‘s short bets.
“High street banks are starting to resemble ailing department stores such as House of Fraser by failing to keep up with online rivals”, wrote Crispin Odey.
“High street banks are starting to resemble ailing department stores such as House of Fraser by failing to keep up with online rivals”
Crispin Odey ‘s bearish wagers could include banks because peer-to-peer online rivals are cutting in on traditional high street banking services
“Banks are watching all their profitable activities – foreign exchange, consumer finance, small company lending – being taken away by fintech companies and peer-to-peer lenders,” wrote Crispin Odey.
“This is frightening for investors because it does not make for repeatable economic growth.” The comments were first reported by Bloomberg.
Indeed, if banking is a part of Crispin Odey ‘s bearish wagers then the hedge fund manager’s short banks play could be yielding handsome profits.
Euro STOXX banks have underperformed the EuroSTOXX 50 by a significant margin. This Bloomberg chart shows the gap. Put another way, the banking sector has been a shorters delight.
Crispin Odey ‘s bearish wagers have put the hedge fund manager in the spotlight.
The billionaire hedge fund manager is famous for making money from a string of big calls (which typically include bearish calls)such as forecasting the financial crisis of 2008.
In 2008 during the financial crisis, Crispin Odey shorted banking shares, a lucrative wager that helped him to earn almost 28 million pounds that year!
“Bulls make money, bears make money, pigs get slaughtered” – Wall Street saying
Could there be value unraveling Crispin Odey ‘s bearish wagers?
“Bulls make money, bears make money, pigs get slaughtered” is an old Wall Street saying that warns investors against excessive greed (and perhaps intoxicated optimism too).
Crispin Odey made his fortune being a pessimist or perhaps better said being a realist while the herd was still partying to “irrational exuberance” – leading up to the 2008 financial crisis many investors believed that the bull market in stocks and real estate would never end.
So the crux of Crispin Odey ‘s bearish wagers is that any business (not just banks and retailers) that is not tuned in to how an online peer-to-peer competitor could win over their market share is likely to go the way of the dinosaur. In other words, the Amazon model goes beyond retail.
Perhaps high street banks, unless they evolve, could be the next big “Sears” story.
For those of you under 35 years will remember that high street banks had a function, the banks used to offer a savings account. But with interest rates so low, for almost a generation, saving accounts have become irrelevant. So an entire generation of young adults is prioritizing short-term spending over long-term savings.
“I didn’t expect negotiations with Brussels to go well and I was a Brexiteer” – Crispin Odey
Another one of Crispin Odey ‘s bearish wagers is the pound sterling
Crispin Odey correctly called Brexit. Approximately, £2.8bn bet against the pound has been taken amid no-deal Brexit fears, Nomura data have indicated. Odey Asset Management along with the other major hedge funds are betting on the pound plunging this year amid no deal Brexit fears.
Hedge fund bosses, including Crispin Odey, are wagering billions on a slump in the pound as bets against the currency reach their highest level in over a year.
Crispin Odey told The Sunday Telegraph that a large short position is building against sterling because investors believe “it is going to be difficult to do a deal”.
“I didn’t expect negotiations with Brussels to go well and I was a Brexiteer” said Crispin Odey.
Indeed, in a piece entitled, No Deal Brexit, dated July 27 I wrote “Expect for the worse case scenario, a no deal Brexit. But equally, hope for the best, Brexit means back-pedal Brexit. It is not going to be the EU’s game to make Brexit smooth, as explained in a previous piece Brexit means back-pedal Brexit, after all, if life outside the EU would be good then other member countries would follow and the EU, the euro would collapse”.
So the Brexit charade is likely to continue, along with the depreciating GBP and declining UK living standards until the voting British public have had enough, demand a second referendum with the obvious outcome. Until then Crispin Odey ‘s bearish wagers is likely to be the GBP.
Crispin Odey is short UK gilts (sovereign debt) too.
Tesla, the electric car maker is also on the list of Crispin Odey ‘s bearish wagers
Crispin Odey’s Tesla’s “Final Stage of Life” view has been gaining traction. Failed promises and erratic behavior from the CEO Elon Musk over the last couple of years is fuelling bearish speculation in the stock and supporting Crispin Odey’s Tesla’s “Final Stage of Life”
So Crispin Odey ‘s bearish wagers are starting to pay off. The Odey Asset Management fund was up 25.8 percent in the first seven months of the year.
Dan Loeb targets Sony. Dan Loeb is an activist investor and founder of Third Point, which oversees about $14.5 billion in assets.
Last year the activist investor viewed Campbell soup as a bargain when Third point reported that the soup maker could fetch a takeover value of $52 to $58 per share.
A year later and the activist investor Dan Loeb targets Sony
Dan Loeb's activist hedge fund Third Point is raising an investment vehicle to generate between $500 million and $1 billion so it can continue to buy Sony shares, according to a recent report in Reuters.