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Odey builds huge bet against Gilts

Odey builds huge bet against Gilts

Crispin Odey has reportedly amassed a £232 million leveraged short on Gilts - larger than the entire value of his €173 million (£151 million) Odey European fund.

The manager’s conviction in a derivative contract expiring in June has consistently increased since November 2016, becoming the largest position in the portfolio, according to documents seen by the FT.  

Contacted by the FT, a spokesperson for the company declined to comment on the position.

The sudden return of volatility since February has rescued Odey from an extended period of underperformance, as big bearish bets consistently lost money in climbing markets.

Benchmark 10 year gilt yields climbed from just 1.1% at the end of last year to a four-year high of 1.6% in February before dropping back to a recent 1.39%.

The company’s flagship European hedge fund returned 8% in February alone according to Reuters, after the value of assets in Odey’s European fund dwindled from €2.5 billion three years ago.

Profit at the business plummeted from £44.3 million to £18.6 million last year, according to the company’s most recent set of numbers, as performance fees fell from £19 million to just £60,000.

In a presentation last year Odey noted: ‘In the UK where, after all, we have had a central bank who have, basically, carried on doing QE into uncertainty of Brexit and, of course, what they are now faced with is encouraging individuals to save even less and to borrow.

‘Now you have a situation whereby your inflation rate, as we know, in the UK is at 3.1%, you have got the public sector borrowing with a cap at 1.5%, but now there is a lot of pressure to release that cap, because why shouldn’t they get some money.’

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