Crispin Odey is reaping the rewards from a controversial bet on Anglo-Russian miner Polymetal, which has seen its shares rebound over the past month after being stung by the war in Ukraine.
The hedge funder revealed to The Mail on Sunday he initiated a holding in the London-listed company two weeks ago, after its share price crashed to historic lows as investors shunned stocks with ties to Russia.
Shares in Polymetal, which operates gold and silver mines in Russia and Kazakhstan, have plunged 75% this year off the back of Russia’s invasion of Ukraine.
It was ejected from the FTSE indices in mid-March alongside three other London stocks with ties to Russia – Raven Property, Petropavlovsk and Evraz – following concerns of insufficient liquidity. However, it continues to trade on the London Stock Exchange.
Odey bought in when shares were trading at £1.40, around one tenth of their value at the start of the year. Explaining his decision, he told the newspaper the market reaction was “really overdone”, noting that 60% of Polymetal’s business is in Kazakhstan.
Like Russian warehouse group Raven Property, Polymetal is also mulling whether to spin-out its Russian business from the rest of the company, the Financial Times reports. This news, alongside a board shakeup, have pepped up its share price over the past month to £3.24, meaning Odey has more than doubled his money.
See also: Raven Property to delist after Russian sanctions make it ‘impracticable’ to carry on
Odey predicts UK is headed for a recession
Odey told The Mail on Sunday the UK was headed for a recession later this year due to the rising cost of living. “Given how tight the labour force is, wages will have to rise quite sharply, and that’s what we’ll get in the second half of the year. Then the pressure will be on interest rates to rise.”
Odey’s flagship European fund has delivered a stonking performance amid challenging markets in 2022. It has risen 57% so far this year, according to data from FE Fundinfo, exceeding 2021’s 54% return. Despite some profitable bets in 2020, Odey’s fund wound up losing around 30%.
Odey Asset Management, his eponymous boutique, has been shedding partners and members from its C-suite. In the past month chief executive Tim Pearey has resigned, and emerging markets lead Rob Marshall-Lee also exited. Last July, chairman David Fletcher also bowed out and does not appear to have been replaced.