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Odey bets finally pay off as hedge rivals come unstuck

Odey bets finally pay off as hedge rivals come unstuck

Crispin Odey registered his best performance in years in 2018 as many of his hedge fund peers came unstuck in the market turbulence. 

According to a study from HSBC's annual investment group, the Odey European fund returned 53% last year. 

That was a dramatic reversal of fortune for the Odey European fund, which dropped 20.5% in 2017, as aggressively bearish bets on the UK economy backfired.

An ardent Brexiteer who donated £1 million to the Leave campaign, Odey has warned each of his missives to investors in the last four years that equities could fall by 50%. 

His negative return in 2017 followed the blistering loss of 50% in 2016, a year which Odey described as 'awful'. 

Despite last year's stunning turnaround, he still has some way to go before recouping the 89.6% loss he endured between 2015 and 2017. 

This dire run resulted in a total wipeout of performance fees earned by the firm.  

Odey's luck began to turn in 2018, however, as a number of Odey's shorts in the retail sector paid off.

Leading the gains in the net return column was a big bet against mall owner Intu, which slumped 42% following the collapse of a takevover bid. A £33 million short on beleaguered Debenhams also generated a significant windfall. 

Odey's performance is nearly double that of the second best performer, Gresham Quant Acar, a computer-driven strategy run by Gresham Investment Management, which returned 28.6%.

Of the 450 hedge funds tracked by HSBC, just 16 delivered positive returns before fees last year. 

Troubled GAM was among the worst performers, with its Systematic Cantab quantitative fund losing 23.1%. 

In a statement to the Financial Times, Anthony Lawler, head of GAM Systematic,  said: '[2018] was a challenging year but not one that causes us to question whether market dynamics have changed.

'Trend-centric strategies expect to be hurt at points of price reversal, and the pay-off to bearing this risk is the ability to perform positively in sustained risk-off or bear market environments.' 

The composite hedge fund index of returns produced by data business Preqin, which covers a broader universe of strategies, reported its first annual loss since 2011. 

The Preqin All-Strategies Hedge Fund benchmark's -2.27% fall in December sent the total decline for the year to -3.42%. 

Equity- and event-driven strategies were hit hardest in the final month of the year, losing -3.17% and -4.22%, respectively. 

Macro strategies were a rare bright spot, returning 0.39% in December, the only 'top-level' strategy Preqin tracks to deliver positive performance for the month.      

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