Odey Says Stocks to Rise If Governments Keep Interest Rates Low
Crispin Odey, whose Odey European Inc. hedge fund has gained about 8 percent this year, said the global economic recovery will drive stock prices higher this year, as long as central bankers don’t succumb to demands that they increase interest rates to fend off inflation.
Odey, 52, told clients on a conference call last month that the European fund is “120 percent net long,” according to an investor, who declined to be identified because the comments weren’t public. Economic data indicates stock markets will go higher, and he’s positioned his portfolio to benefit, said Odey, whose firm manages about $6 billion, according to its website.
The MSCI World Index of global stocks has returned 4.8 percent this year, after most companies’ profits beat analyst estimates and European leaders pledged to support the region’s most-indebted countries. Policy makers should keep interest rates negative, when adjusted for inflation, for as long three more years to avoid choking off the recovery, London-based Odey said on the call with investors.
“We have good stock selections and the markets have been strong,” David Stewart, chief executive officer of Odey Asset Management LLP, said in an interview. “It’s early days.”
Hedge funds are private pools of capital whose managers buy or sell assets and bet on rising as well as falling prices. The Odey European fund gained about 3.4 percent in January, when so- called long-short equity hedge funds increased less than 1 percent on average, according to data compiled by Bloomberg.
The Odey fund fell less than 0.1 percent in 2010, when funds that bet on rising and falling stock prices averaged an 11 percent gain. The European fund increased 34 percent in 2009 when Odey correctly bet that bank stocks hit by the financial crisis would rebound. His fund has gained 19 percent a year on average since the start of 2006.
The shares gained 78 percent, as the company last month said it added subscribers and forecast a narrower loss for 2011. Odey owns 79.7 million Sky Deutschland shares, making him the company’s second-biggest holder after News Corp., according to data compiled by Bloomberg.
Odey owns 33.1 million shares of Infineon Technologies AG, Europe’s second-largest maker of computer chips, according to data compiled by Bloomberg. Shares of the Neubiberg, Germany based company have returned 16 percent this year.
Germany is on the verge of a consumer-driven economic boom, which will be fueled by record-low interest rates and a high level of employment, Odey told investors.
Within two years, Germany will switch from having Europe’s lowest inflation rate to having its highest, he predicted. The economic growth should also benefit indebted countries such as Spain, which will likely increase their exports to Germany, Odey said on the investor call.
Odey, a former fund manager at Baring Asset Management, started Odey Asset Management in 1991.
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