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Hugh Hendry Swaps Hedge Fund for Hot Spot in Caribbean Comeback

Hugh Hendry Swaps Hedge Fund for Hot Spot in Caribbean Comeback

(Bloomberg) --

Former hedge fund manager Hugh Hendry has a new gig as a property developer in the celebrity island playground of St. Barts.

Hendry, 50, shut down his macro trading firm in 2017 after a 15-year run ended in mounting losses. Now he’s looking to cash in on demand for homes on the Caribbean island best known as a holiday destination for the rich and famous. He aims to raise $50 million to acquire land for development and to renovate existing properties.

Hugh Hendry Swaps Hedge Fund for Hot Spot in Caribbean Comeback

In addition to building high-end luxury villas, Hendry also plans to build affordable homes to help address what he called a “housing crisis for the working community” on the island. The fund, based in Luxembourg, could deliver annualized returns of at least 10% for investors, he said.

“This place is one of a kind,” he said, likening the island to Galt’s Gulch in Ayn Rand’s novel “Atlas Shrugged.” “It’s where all the rich folks are going to end up at the end of this mammoth return-on-capital cycle.”

Most tourists stay in villas that can range from $500 a room per night to well over $100,000 a week, Hendry said. The situation is different for the people who work on the island.

‘Ski Village’

“St. Barts is like a ski village with a 10-month season -- lots of young kids who work hard and play hard,” he said. “No one can normally afford to buy a house; there is no such thing as affordable homes.”

This dilemma was compounded by Hurricane Irma, which battered St. Barts in 2017, damaging a lot of properties, reducing the housing stock and pushing rents higher.

“There is a clear and evident demand for capital to come in and eliminate the shortage,” Hendry said.

Years of mediocre returns and investor withdrawals have diminished job prospects in the $3 trillion hedge-fund industry, forcing some of its best-known names to quit. While many return after a break to launch new funds, others have branched out into everything from picking winners in the marijuana industry to selling sandwiches.

Hendry’s hedge fund churned out a 31% return by betting against U.S. and European banks during the 2008 financial crisis. He also attracted attention for his bearish view on China in 2009, when he posted videos on YouTube in which he toured cities and identified office buildings that he said had no tenants. Then in 2017, Hendry packed it in, saying the macro hedge fund model was broken.

An outspoken Scot known for his contrarian views, Hendry first worked for Edinburgh investment manager Baillie Gifford, then moved on to Credit Suisse Group AG. He joined hedge-fund manager Crispin Odey in 1999 before breaking away to form his own firm, Eclectica Asset Management.

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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