Crispin Odey’s surprise losses came in December when the London based hedge fund manager reported that his profits more than halved at his boutique investment house.
Operating profit has slumped to £8.7 million (roughly $11 million) for the year ending in April 2018 from £18.6 million, according to the latest accounts for Odey Asset Management, which were published recently at UK’s Companies House.
Crispin Odey’s surprise losses at Odey Asset Management, a fund which Crispin Odey found himself caught a number of investors wrong-footed.
“Although the year shows a fall in revenue, this was in line with expectations based on net outflows of assets under management”
Crispin Odey’s surprise bearish wages (short bets) somehow didn’t have a significant impact on the fund’s latest financial results, and perhaps that is a surprise, bearing in mind that many stocks entered bear territory in the final quarter of 2008.
Overall, 2008 was the worst year for stocks since the financial crisis of 2008 with banks particularly fearing the worst.
The Dow Jones Industrial Average declined 5.6% during 2018, but it was down 13.4% from the intraday high it hit on Oct. 3. Financial were down 21% from there 52 weeks high.
The FTSE 100 index shed 12.48% of its value year to date and close the year down by the same amount.
Despite Brexit fears, Europe STOXX Europe 600 Index underperformed the UK main stock index closing 2018 with a 13.24% loss.
“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 surprise losses somehow just do not reconcile with the billionaire investor’s sharp calls
Crispin Odey bet that Britain would crash out of the EU without a deal, a sharp call (which I also envisaged would be on the cards) boosted his fund’s coffers. So Crispin Odey’s bearish fund has profited from the fall in sterling and UK assets. Crispin Odey also profited in the past few months from betting against troubled department store chain Debenhams and property giant Intu.
Moreover, Crispin Odey no doubt had a bear feast shorting banks. Back in October Crispin Odey said, “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 noted that peer-to-peer online rivals are cutting in on traditional high street banking services.
So an obvious question follows: Where did Crispin Odey’s surprise losses come from, bearing in mind the UK’s famous permabear who profits from shorting financial market has lately been bang on the money?
‘Bad days tend to be good days for us’, said the billionaire hedge fund investors Crispin Odey. Put another way bear markets are a moveable feast for hedge funds with portfolios weighted towards short bets.
“Crispin Odey’s surprise losses could have been attributed to a decade of an unprecedented amount of monetary easing from the major central banks”
Crispin Odey’s surprise losses came from the firm’s parent company, Odey Asset Management Group which saw revenue fall from £47.5 million to £31.2 million for the year
A note in the document said: “Although the year shows a fall in revenue, this was in line with expectations based on net outflows of assets under management.”
The closure of two of Crispin Odey’s two funds, Odey European Absolute Return Fund, and Odey European Allegra Fund, a plain vanilla long-short European equity fund closed in April 2017. Two years early Hedge fund manager Crispin Odey warned of a number of threats to the global economy following an announcement back in April 2015 that profits had been halved.
Crispin Odey’s surprise losses could have been attributed to a decade of an unprecedented amount of monetary easing from the major central banks
Crispin Odey’s swan funds experienced a challenging period during the central bank’s quantitative easing QE era. In 2015 his fund was down 12.7% full-year, and 18% in the April’s QE rally alone that year.
Crispin Odey’s assets under management as of this April were $5 billion, down from $6.1 billion in 2017. The fund’s Management described the performance as “satisfactory.”
Odey Asset Management has declared short positions worth a reported £149 million against a raft of retailers and consumer-facing firms.
The accounts for Odey Asset Management also show performance fees increased to £385,000 from £60,000 in 2017. But this was far short of the £19.2 million in performance fees recorded in 2016.
The partnership consists of around 18 members during the year, who will share £8.6 million, which was down from £17.8 million. Crispin Odey is believed to be the member with the largest entitlement.
“Crispin Odey’s surprise losses mean that the billionaire hedge fund manager has seen his income fall from £5.5 million to £1.4 million over the period”
Will Crispin Odey’s surprise losses be less of a surprise going forward?
Sterling could be the foreign exchange’s come back kid story in 2019 if the uncertainty over Brexit ends up being overplayed The pound hit lows of $1.25 in December on intense political uncertainty but economists suspect this worry is over-done. Sterling is set to rise to $1.38 by the end of 2019 according to the consensus forecast compiled by Focus Economics.
“We currently forecast the pound to be at $1.41 at end-2019,” said a city economists.
But Crispin Odey’s surprise losses could be super-seated by another eyebrow-raising announcement. The billionaire hedge fund manager has political ambitions. ‘I’ve wasted my time making money for the last 30 years’, said Crispin Odey. Crispin Odey is looking to enter UK politics and if he is successful it would be a City heavyweight heading for Westminster. The erudite, outspoken hedge fund manager is a eurosceptic and a staunch Brexit-supporter. Stay tuned.
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.