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Clark’s Hedge Fund Plunges by Record 35% as Short Bets Backfire

Clark’s Hedge Fund Plunges by Record 35% as Short Bets Backfire

(Bloomberg) -- Russell Clark’s hedge fund slumped by 35% last year -- its biggest-ever annual loss -- as his short bets went awry during the longest bull market in history.

The Horseman Global Fund has persistently wagered against equities since 2012, and raised its net short position to a record 111% of gross assets in October. Clark’s bold, contrarian move, which has made him one of the most watched hedge fund managers in the world, backfired as the S&P 500 index surged 31.5% last year.

A spokeswoman for Horseman Capital Management confirmed the numbers.

“This year has not worked out as planned,” Clark wrote to clients last month, signaling that he was sticking with his bearish wagers. “I increasingly hear talk that central bank and government activism has ended recessions and possibly bear markets. Maybe this is true, but it seems to me that we are at a turning point.”

With his assets rapidly diminishing, Clark is facing a race against time to save his fund. He is one of the last short sellers left who’s willing to make such directional bets amid a rising market. Horseman Global Fund managed $241 million at the end of November, down from $1.7 billion at the end of 2015.

Clark’s Hedge Fund Plunges by Record 35% as Short Bets Backfire

In a sharp contrast to Clark’s fund, the firm’s smaller Horseman European Select strategy benefited from its long bets on stocks to end the year up 38%. The European fund will shut at the end of February as its manager Stephen Roberts moves on to invest for his own family office.

The firm’s third fund, which bets on Japanese equities, lost 5%.

To contact the reporter on this story: Nishant Kumar in London at nkumar173@bloomberg.net

To contact the editors responsible for this story: Shelley Robinson at ssmith118@bloomberg.net, Patrick Henry, Marion Dakers

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