Hours after Britain’s decision to leave the European Union sparked
mayhem across global financial markets, a handful of prescient investors
began to emerge as big winners.
Hedge fund manager Crispin Odey,
an advocate of a British exit, gained more than 15 percent in his
flagship fund on Friday, according to a person familiar with the
situation. Several hedge funds that use computers to follow trends,
including David Harding’s Winton Capital Management, also reported
gains. Shares of a Canadian insurer that was betting on deflation
They were among the few -- or, at least, the known few --
who profited as the pound plunged to the lowest since 1985, global
stocks tumbled and bonds and gold rallied. George Soros, the billionaire
who forged his reputation by making a billion-dollar score in a 1992
bet that the U.K. would devalue the pound, had warned Britons days
before the vote that they were underestimating the true cost of a Brexit
and that the only winners would be speculative forces seeking to
exploit such a decision.
had conducted a private poll ahead of the decision showing the vote was
much closer than financial markets expected. Another hedge fund
manager, Paul Tudor Jones’s $11.6 billion Tudor Investment Corp., told
investors last week that the chances of a U.K. exit from the EU were
higher than betting odds suggested.
think the likelihood that a U.K. majority votes to leave the EU is far
higher than current betting odds of 40 percent,” the firm, one of the
oldest hedge fund managers, said in a June 15 letter. “This probability
is sufficiently high that investors need to plan for the aftermath of
such a vote.”
Odey’s $10.2 billion Odey Asset Management profited
because of short positions the firm had in place since last year, said
the person, who asked not to be identified because the information is
private. The flagship fund, Odey European, had lost money before the
vote, falling 25 percent in the first five-and-a-half months of the
It wasn’t clear on Friday whether Tudor had made money
betting on a British leave vote. Most hedge funds will update their
investors on performance after the markets are closed for the day or
Odey, 57, didn’t
immediately reply to a request for comment on his performance. Patrick
Clifford, a spokesman for Greenwich, Connecticut-based Tudor, declined
The British pound fell, while
demand for haven assets from U.S. Treasuries to gold surged. The yen
briefly strengthened past 100 per dollar for the first time since 2013.
Treasury yields had their biggest drop in more than four years and gold
rallied above $1,300 an ounce. European stocks bore the brunt of the
carnage in equities, with the Stoxx 600 Index sliding 7 percent in its
worst day since October 2008.
Soros warned in an op-ed published
in the U.K.’s Guardian newspaper on Tuesday that the pound would fall by
at least 15 percent and potentially more than 20 percent in case of a
leave vote. He wrote that such a devaluation would be less benign than
in 1992, when he put on his winning trade against the Bank of England,
in part because there’s very little room to cut interest rates.
there are speculative forces in the markets much bigger and more
powerful,” Soros wrote in the op-ed. “And they will be eager to exploit
any miscalculations by the British government or British voters.”
Fund Management, which oversees the wealth of George Soros and his
family, had dialed back its U.S. stock investments in the first quarter,
while adding gold and bets against equities. It’s unclear whether Soros
changed positions since then, or made money on Friday.
Michael Vachon, a spokesman for Soros Fund Management, declined to comment on the firm’s performance.
of making a directional bet, hedge funds that employ computers to
follow trends also did well. Aspect Capital’s flagship $797 million
Diversified Fund was up almost 4 percent on the day as of mid-afternoon,
the $2.5 billion Cantab Capital Partners Quantitative Fund rose more
than 3 percent, and the $12.8 billion Winton Futures Fund gained about 2
percent, according to people with access to initial return estimates
for the funds.
Spokesmen for Cantab, Winton and Aspect declined to comment.
is the winning strategy in this troubled environment,” said Philippe
Ferreira, head of research at Lyxor Asset Management. “This is typically
an environment conducive for hedge funds who can trade the higher
volatility and outperform traditional markets.”
Anthony Lawler, a
money manager at GAM Holding AG in London who tracks hedge-fund
performance, said such funds were making money from their bets that U.S.
Treasuries, European sovereign fixed income and the U.S. dollar would
rise in value, while the energy sector and pound would face a sell-off.