Crispin Odey (pictured) is licking his wounds following a challenging month for his European long/short equity fund in which several of his bets against the UK market and sterling failed to pan out amid rising equity and bond markets.
In a letter to investors seen by the Financial Times Odey Asset Management confirmed the eponymous founder’s European hedge fund had racked up losses of 12.7% in September.
This left the fund down 18.1% for the first nine months of the year.
Since then the fund’s losses have widened with data from FE Analytics showing it down 19.3% in sterling terms for the year.
News of the fund’s weak performance comes amid speculation that Odey would be set to make a killing from a no-deal Brexit. Both former chancellor Philip Hammond and Boris Johnson’s sister Rachel Johnson have accused the prime minister of pursuing a no deal option to enrich his hedge fund backers.
Bad bets
Odey’s bets against domestic financial stocks and the pound were ultimately responsible for landing the fund in hot water, as both performed better than expected last month.
Lancashire Holdings, the biggest position in Odey European, saw its share price spike 9% in September as Odey was heavily shorting it.
Similarly sterling recovered some ground against the dollar and was back up at $1.26 by the middle of the month.
However these losses were somewhat offset by a big short against Metro Bank, which recently saw its shares dive after its £200m bond offering failed to attract investors. Year-to-date shares in the retail bank are down 88%.
Odey European’s turbulent September is the latest hiccup for the ardent Brexiteer’s debut long/short vehicle.
The London hedge fund manager has been betting against the UK economy since the EU Referendum, with varying degrees of success, despite being one of the five major donors who contributed £14.9m to the Leave campaigns.
While his fund made £220m on the day the UK voted to leave the EU, the fund has recorded three years of calendar losses, including a drop of nearly 50% in 2016. But last year it rebounded strongly, finishing out 2018 up 53%.
Since 2015 the fund has shrivelled in size from €2.5bn (£2.3bn) to €184m (£165.5m).
