Twitter icon Email alerts icon Latest News RSS icon Magazine icon Stay connected:

View the article online at

Crispin Odey: this is year for hedge funds not long-only

by James Phillipps on Jan 15, 2014 at 12:59

Crispin Odey: this is year for hedge funds not long-only

Crispin Odey believes 2014 will be a year for hedge funds rather than long-only with the stock market set to get a lot more selective.

In a note to investors in his £1.7 billion Odey European fund, he said although he expects growth to surprise on the upside, particularly in the US, interest rate rises will introduce a new set of challenges.

‘This is the year, especially in the US, where growth should surprise on the upside. With that will come questions about how quickly interest rates might normalise,’ Odey said.

‘We have often written about how overdue the replacement cycle is. Is this the year when orders blow the socks off forecasts? We think it is but we have thought so for a few years now.’

Although this may sound bullish on the face of it, Odey questions the duration of the upturn, saying house building will be the key indicator to watch. He said the improvement in the housing market has been driven by the fall in prices in the wake of the financial crisis and the low cost of money. To sustain this, he said consumer confidence needs to improve markedly.

‘Enduring demand will be driven by people feeling that employment prospects are sufficiently buoyant and wage rises reassuringly likely that it is worthwhile creating new families (and borrowing the money to buy the house),’ he said.

‘Is this likely? US house builders on 10x EV/EBIT against 13 x EV/EBIT in the UK tell you that US investors are still not believers.’

Despite this cautiousness, he believes investors can still make attractive returns this year because there is ‘enough in the soil and in the air to grow what we want’. However, he says investors will need to be far more selective.

‘A world which grows produces different problems, and rising rates, even if in real terms they are falling, will paid to the more idle speculative bubbles around,’ he said.

‘A year more for the hedge funds than the long equity funds, I suspect.’

The Odey European fund was up 25.8% in 2013, compared to the MSCI Europe's 19.9% rise.

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

Sponsored Video: Bringing it all back home

As the UK coalition government strives to rebalance the national economy, so called 'reshoring' looks set to play an increasingly important role in economic recovery.

Today's top headlines

Investing for income in a changing environment

With talk on interest rates on the horizon, our latest roundtable debate covers income investing against a changing backdrop

More about this:

Look up the fund managers

  • Crispin Odey
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them


On the road

Click here to find out more from the Audience Development team.

Sorry, this link is not
quite ready yet