THE WOES of hedge fund managers were underlined yesterday when Crispin Odey’s flagship European vehicle became the latest to reveal steep losses.
In a letter to clients, seen by City A.M., Odey Asset Management said its European fund lost 8.3 per cent last month, after some of its long positions, such as Sky Deutschland, performed poorly.
The fund’s performance improved slightly this month and is down by 16 to 17 per cent so far this year, David Stewart, chief executive of Odey Asset Management, told City A.M.
The Odey MAC hedge fund has performed two to three per cent better than its European sister product, he added, meaning it is down 13 to 15 per cent.
Stewart said Crispin Odey had been “very clear why he is long on equities” referring to the founder’s bullish stance on stocks.
“Investment is a long-term game (but) nobody is relaxed when you are doing poorly,” he added.
Odey’s firm, which made millions during the financial crisis by shorting stricken City banks, has seen better performance elsewhere, however. James Hanbury’s absolute return fund and Michele Ragazzi’s Giano Capital fund are both up by four to five per cent so far this year.
It comes only days after billionaire American investor John Paulson warned of the possibility of mass redemptions at his Advantage Plus fund and Man Group revealed its flagship computer vehicle had been caught out by a rally in equities and a sell-off in bonds.
The average equity hedge fund lost 5.65 per cent of its value in September and is down nearly 10 per cent this year, according to Hedge Fund Research.
Sarah Ing, an analyst at Singer Capital Markets, said the recent performance of hedge funds had been poor.
“There have been some funds with very low returns this year, like Paulson and Odey. There is a lot of uncertainty, causing a lot of whip-sawing in the environment. It is a very difficult time.”
Yesterday Man suffered another blow when Raffaele Costa quit as deputy head of sales and marketing for the US and Europe.
He was previously an executive at GLG Partners and joined Man when it bought its rival for $1.6bn (£1.02bn) last year in an attempt to lessen its reliance on its quant fund AHL. He is leaving to launch a property investment firm but will continue to advise the group.
Man has been the subject of takeover talk after its shares tanked on poor performance at both its GLG funds and AHL.