Odey’s Hedge Fund Slumps 49.5% in Worst Ever Annual Loss

Updated on
  • Crispin Odey’s bearish bets suffered as stocks surged in 2016
  • He was one of the market’s most prominent backers of Brexit

Crispin Odey's Hedge Fund Suffers 49.5% Loss

Crispin Odey’s main hedge fund slumped 49.5 percent in 2016, its worst annual decline since it began trading in 1992, according to an investor letter.

Crispin Odey

Source: Odey Asset Management

The billionaire, who last month complained that “mindless” passive investing was driving out active fund managers, saw his bearish bets against stocks suffer amid a surge in equities. His Odey European Inc. fund lost 3.4 percent in December, the letter shows.

Odey warned in October that U.K. stocks could slump 80 percent as the economy suffered a recession and higher inflation following the Brexit vote. His fund’s loss lags behind a more than 4 percent gain by peers, according to preliminary estimates from data provider Eurekahedge.

“Even if his assessment is correct, the problem with ultra-bearish bets is the timing,” said Jacob Schmidt, chief executive officer at investment advisory firm Schmidt Research Partners in London.

“As per JM Keynes, the market can remain irrational longer than you can remain solvent,” he said, referring to a comment by the famous economist. “Minus 50 percent is a very serious drawdown.”

Odey backed the U.K.’s decision to leave the European Union and has been a vocal critic of central banks’ intervention in the world economy. Nobody at his company, which oversees about $8 billion, was immediately available for comment.

(Adds researcher’s comment in fourth paragraph.)
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