Hanbury’s Hedge Fund at Odey Writes Down Russia Bets to Zero
Hanbury’s Hedge Fund at Odey Writes Down Russia Bets to Zero
(Bloomberg) --
A hedge fund at a unit of Odey Asset Management has marked its Russian equity exposures down to “close to or at zero” after the country’s invasion of Ukraine.
Money manager James Hanbury apologized to investors for the losses in a letter, a copy of which was seen by Bloomberg. His Brook Developed Markets Fund plunged 10.6% last month -- one of the biggest monthly declines for the $500 million strategy in its nine-year history -- due to its Russian equity bets, the letter said.
“Having any exposure to Russia coming into this crisis was, in hindsight, clearly unfortunate,” Hanbury told clients. “As a team, we both under-priced the risk of a full-blown military invasion and we did not expect the Western sanctions to be as severe as they have been.”
Hedge funds with exposure to Russia were hit hard last month after President Vladimir Putin’s invasion of Ukraine triggered a wave of international sanctions aimed at isolating the country. The measures made Russian assets largely untradeable, with several hedge funds losing more than 10%.
Ahead of Russia’s war, Hanbury owned Sberbank of Russia PJSC, TCS Group Holding Plc, United Co of Rusal International PJSC and Inter Rao UES PJSC, according to the letter. All of them have collapsed in value.
A spokesman for the London-based money manager declined to comment.
Markdowns at Hanbury’s hedge fund by its fund administrator reflected the closing of local exchanges and the Russian Central Bank’s indefinite ban on sales by foreign entities. Russian equity was just 0.2% of the Brook Developed Markets Fund’s net asset value on March 3, down from 7.8% on Feb. 23, the letter said.
“Whilst clearly painful in the near term, from here the four Russian equities in the fund on the eve of Russia’s invasion of Ukraine will sit in the long book as hopefully cheap options,” he said.
Money managers at Odey Asset Management have had mixed fortunes in the past month. While Hanbury lost out, Crispin Odey’s main European Inc. hedge fund ended February up 7.9%, though it pared some gains during the second half of the month, according to an investor document. The fund is up about 33% year to date.
The firm’s smaller Odey Concentrated Natural Resources Fund run by Henry Steel, which had benefited from a surge in Rusal shares last year, declined 23.9% last month, according to another document.
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