Crispin Odey’s Hedge Fund Surges 53% as Short Bond Bet Pays Off

(Bloomberg) --

Crispin Odey’s high-conviction short bet on government bonds is paying off.

His flagship Odey European Inc hedge fund soared by about 15% in March, according to an investor update seen by Bloomberg. That lifted this year’s return to 53%, the update shows.

Odey has long predicted and bet on surging inflation and is being rewarded now as central banks reverse their easy money policies and scramble to combat soaring prices. 

A spokesman for London-based Odey Asset Management declined to comment.

Odey’s leveraged short exposure to bond trades totaled almost 500% of his fund’s net asset value at the end of February, mostly related to two U.K. government securities that mature in 2050 and 2061, according to a separate investor letter. The fund made money as both the long-dated bonds fell this year.

“Everybody knows that the West is bankrupt somewhere around interest rates of 3%, so the fight now is how can 0.5% interest rates slow down inflation which is potentially on its way through 10%,” Odey told clients in the letter last month. “Long bonds are fighting this battle pretty much on their own.”

The bounce back is helping Odey recover from five annual declines in six years through 2020. He made almost 54% last year but is yet to recover all the losses since 2015. 

His investing strategy ran about $600 million at the end of February.

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