I was an admirer and fan of Crispin Odey, the charismatic head of Odey Asset Management. I have seen how his strong convictions and his money mouth is ways to have built his fund into a titan and to earn a profit of £143 million and performance fees of £58 just two years ago. I understand he is also a good chart reader. I appeared on TV with him once and was awestruck by his confidence in his views. He is no pussyfooter. But, just before the Brexit vote he became stubbornly bearish in his views. I was very alarmed.
Crispin Odey told us all how leveraged he was for a fall in the UK and world stock markets. He placed a short-term, highly geared (including gold longs to profit from the coming chaos) because he thought the vote would be leave. He shouted loudly how certain he was he would be right and how he was one of the very few ready to profit from the forthcoming disaster. I remarked at the time that no one can be so confident of forecasting the future and how this was not good governance of other people’s money to gear himself up to an extent that. If there was anything less than a meltdown, he would lose money. He was right but the markets went the other way. While he was well prepared for Brexit having campaigned for the UK to leave Europe in the 2015 referendum, he was wrong-footed in market move which followed and in a number of other areas. These included the fall in the US dollar (something I did not expect but was one of my most profitable trades of the year) and the level of stimulus in Europe and China. The DROP in market volatility. Some other calls which have gone wrong for Odey in the last two years include a leveraged bet on the Australian dollar, which turned sour at the start of 2015. In my opinion, he was out of control. His ego and vanity had taken over his investment process.
He has now had to admit to his depleted investor base, his performance has ‘not been good’. We can now see the cost of this folly. From a flagship fund profit of £143 million and incentive fees of £58 million we can see from accounts filed with Companies House over Christmas, Odey’s hedge fund boutique saw profit dive to 5 April 2017. Performance fees were virtually wiped out at £60,000. It is suggested Crispin did manage to pay himself a meagre £5.5 million last year.
I take no pleasure in anyone’s misfortune and know I mad many wrong calls, some in common with Crispin. However, I know my analysis is just a windsock and not a crystal ball and would never never bet the farm on any of my views. I still live on a farm because it has never be put at risk.