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Crispin Odey’s Odey European fund is back on the losing track after a one-month hiatus.
The London hedge fund, which famously lost 49.5 percent last year after dropping nearly 13 percent in 2015, returned to the red in February after losing 3.9 percent for the month.
This was its seventh monthly loss in the past eight months. The fund, as well as other Odey funds, ran into trouble after going net short on the stock market.
In addition, although the firm correctly predicted the Brexit vote, it got China wrong, according to a report earlier this year in the Times of London. “We didn’t anticipate that the Chinese would reflate like they did last year,” Odey told the paper in an interview.
At the beginning of 2017, Odey also fired some people at the firm, which currently has more than $6.7 billion under management. This is down from $8 billion, The Times reported.
According to fund documents, the fund — launched in 1992 — mostly invests in stocks, bonds, and currencies. It tends to be weighted toward European securities.
In February, all five of its biggest losers were short positions.
According to the fund’s February monthly report, obtained by Alpha, it was short Ashmore, a British investment manager that specializes in emerging markets; Intu Properties, a British real estate investment trust that specializes in shopping centers; British auction house Sotheby’s; soft-drink giant Coca Cola; and Luxembourg steel giant ArcelorMittal.
In February, four of the five biggest gainers were long positions: Randgold Resources, a gold miner that mostly operates in Mali; asset manager Man Group; Hunter Douglas, the Dutch maker of window blinds; and BAE Systems, a British defense company.
It also made money shorting Tullow Oil, an oil and gas exploration company founded in Tullow, Ireland.
At the end of February, Odey European was still more than 33 percent net short equities. It was 114.3 percent long and 147.9 percent short, according to the fund’s report.
The multi-strategy/macro fund was also 200 percent short government bonds and 180 percent long foreign exchange. The fund also has a small long exposure to commodities.
Drilling further down, Odey European had a large negative bet on consumer discretionary stocks, and was overall nearly 30 percent net short the sector.
The fund was also roughly 10 percent net short financials and had a smaller net short exposure to consumer staples and energy stocks.
Odey European’s biggest geographical allocation was to the U.K., where it was nearly 30 percent net short, and to a lesser degree in the U.S., which was nearly 20 percent net short. On the other hand, it was roughly 15 percent long Japan — and had no negative bets against stocks that country.
Overall, its three largest holdings were all macro positions. Its largest — which dwarfs the rest of the portfolio — was a short position in long gilt futures, or a bet against British government bonds. Its second largest position was a short position in Japanese 10-year bonds. This was followed by a long position in gold futures.
Altogether, seven of the fund’s top-10 positions were shorts.
Obviously, Crispin Odey is still willing to live and die on his negative bets.
