Not many fund managers could justify a bonus of £28m last year, but Crispin Odey could.
In 2008, when the market was going through turmoil, Crispin Odey's funds were making money and he was able to pay himself a bonus of £28m. That, and the fact that he was right when others were wrong, has made him one of the most keenly watched hedge fund managers in London.
Background and early career
Born in 1959, Odey was educated at Harrow, before graduating with a degree in history and economics from Christ Church, Oxford, in 1980. He managed funds at Barings Asset Management and Framlington Fund Managers, and went on to found Odey Asset Management in 1991.
His reputation for making the right calls over the years has enabled Odey to build his assets under management to around £4bn. In particular, he was bearish about the banks for several years before the credit crisis broke, and had been warning of the dangers of excessive debt and inflated house prices.
As far back as 2005, Odey was short-selling Bradford & Bingley, and at a time when the state-owned German banks, the 'landesbanks', were all considered rock-solid, he regarded them as nearly all bust, which turned out to be closer to the truth.
His short positions continued into early 2009, and he continued to make money while the market was tanking. But rather than getting caught by the rebound, he recognised the effect of quantitative easing and became a bull at the right time.
In April of this year he was predicting that the rally would become a bull market, shunning defensive stocks such as foods and pharmaceuticals, and investing in banks, including Barclays (LSE: BARC). (Odey is married to Nichola Pease, Deputy Chairman of fund firm JO Hambro Capital Management, and a member of the family that founded Barclays). It proved to be the right decision, with Odey reportedly up 47% year-to-date and defensives lagging the market.
Odey says he has "an industrialist's approach to investing", looking for businesses and sectors that are out of favour but fundamentally strong. He is a contrarian, often betting against the consensus, as he did with the banks. Not categorising his style in the 'growth' or 'value' camps, he takes his cue from his company's macroeconomic research, and positions himself accordingly. He does not restrict his investments to any particular asset classes or regions.
In an article last week in the Financial Times, Odey described the current market as a "rational bubble", arguing that in an era of artificially cheap money and increasingly fragile government finances, it makes perfect sense for investors to pile into equities, but that does not imply an economic recovery.
Despite the dangers of inflation caused by quantitative easing, he regards it as the lesser evil; as he said back in January, "in a world of debt and deflation, inflation is our friend". And while the bull market could continue to run for several months, he foresees another serious crisis a few years down the line.
As the situation unfolds, his opinions will be followed closely in the City and beyond.
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