Crispin Odey has closed his flagship European hedge fund to new investments after scoring big wins from shorting the pound in the lead-up to the UK’s catastrophic mini-budget and betting on coal companies.
Clients were notified on 26 October that Odey European had been soft-closed, along with the OEI Mac and Odey Swan funds to “protect the interests of our existing investors… and to provide the best opportunities for fund performance in the future”, according to an investor letter seen by Financial News and confirmed by a source close to the business.
Michael Ede, chief operating officer and partner at Odey Asset Management, wrote that trio of funds had seen a “significant increase” in assets under management after a bumper year for performance.
“We want to keep the AUM within a level that does not compromise our ability to maintain the strategy’s risk/reward profile, and consequently performance,” Ede added in the letter.
Existing investors will be able to add subscriptions into the funds, and redemptions will carry on as normal, according to the letter.
So far this year, Odey European has returned 193%, according to the fund’s September factsheet, seen with FN, topping its previous best of 60% back in 1993. The fund’s benchmark, the MSCI Daily TR Net Europe, has lost 17%, the same document shows.
By the end of September, the fund had €402m in assets, and assets across all three funds that have soft-closed had climbed to $1.2bn, according to the factsheet.
Like Odey European, OEI Mac and Odey Swan are long/short vehicles that mainly invest in European securities, and are also run by Odey and co-manager Freddie Neave.
A presentation given by Odey Asset Management to investors, also seen by FN, shows the City hedge fund manager’s bet against the pound has been one of the biggest drivers of performance so far this year, generating returns of 32% for investors in his flagship fund.
But Odey’s government bond calls, including shorts against the long-dated UK gilts, have done most of the heavy-lifting for the fund, generating gains of 149% year-to-date, the presentation showed.
The timing of Odey’s sterling shorts, ahead of the mini-budget on 23 September, drew significant attention given then-chancellor Kwasi Kwarteng had previously worked for Odey’s London-based firm as an analyst.
However, Odey told ITV’s Robert Peston that by the end of the quarter, he had reversed his short position, and was now profiting from the pound’s recovery.
Another controversial bet that has paid off big for the Brexiteer is his bullish outlook on coal companies.
Australia-based Whitehaven Coal was the biggest winner across Odey European, OEI Mac and Odey Swan in the third quarter, according to the investor presentation, followed by New Hope, another Australian coal miner. Year-to-date, the former has seen its shares spike 227%, while the latter is up 144% as demand for thermal coal soared amid the energy crisis.
Odey’s flagship fund has also done well out of other anti-ESG names this year, such as Houston offshore driller Valaris and Norwegian oil firm Aker BP, which are among Odey European’s top 10 contributors, the presentation shows.
Earlier this year, Odey revealed to the The Mail on Sunday that he had profited from Anglo-Russian miner Polymetal, which saw its shares rebound sharply after falling 75% in the immediate aftermath of the start of the war in Ukraine.
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