A Brexit-backing hedge fund manager who earned £220m from the collapse of UK markets in the days after the EU referendum has now slumped to his biggest ever losses.
Billionaire Crispin Odey, who manages about £6.5bn for clients of Odey Asset Management, saw his fund lose 49.5 per cent of its value in 2016 as his ultra-pessimistic bets on the UK economy turned sour.
The outspoken financier was one of the most high-profile backers of the Leave campaign and predicted UK stocks would lose up to 80 per cent of their value amid a recession and higher inflation. The FTSE 100 has since surged to record highs.
Mr Odey, who last month complained that “mindless” passive investing was driving out active fund managers such as himself, steered his flagship European fund to a 3.4 per cent loss in December. The average for other similar funds during the month was a 4 per cent gain.
Jacob Schmidt, chief executive officer at investment advisory firm Schmidt Research Partners, told Bloomberg: “Even if his assessment is correct, the problem with ultra-bearish bets is the timing.
“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 per cent is a very serious drawdown.”
Mr Odey had hailed his own performance after the Brexit vote. At the time he said: “This is a good day for me. I was brave. I had a lot of clients who were angry with me but they won’t be quite so angry this morning. Life is not about being un-brave at the right time. We in the City have certain skills.”
“There’s that Italian expression,” he told the BBC. “‘Al mattino ha l’oro in bocca’ – the morning has gold in its mouth – and never has one felt so much that idea as this morning really.”
Mr Odey has been a vocal critic of central banks’ intervention in the world economy. In a letter to investors in October he blamed Bank of England Governor Mark Carney for soaring import prices. By keeping interest rates low, Mr Carney exacerbated the fall in the value of the pound, which has increased inflation, Mr Odey said.
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