Crispin Odey, the leading hedge fund operator whose financial insights have made him a multi-millionaire, has warned that a series of threats to the global economy, including the potential bubble in the UK housing market, will make 2016 a difficult year for investors.
Mr Odey, considered one of the brightest London hedge fund operators, has cautioned that a ‘string of threats’ ranging from a possible devaluation of China’s Yuan to concerns about the US economy could damage returns. He made the warning after profits at the hedge fund which bears his name fell by more than half last year.
The 22 partners at Odey Asset Management, the hedge fund he founded in 1991, shared a reported profit of £84.1 million in the year to April 2015, according to accounts recently filed at Companies House. That compares with a record sum of £174.2 million for the prior year. Mr Odey took home £31.8 million, down from £47.8 million. The lower payments reflected a steep decline in the fees partners received for the performance of the £13.7 billion in investments under their management. In 2014, they received £143.5 million, as Odey Funds reaped big rewards in the global recovery.
Mr Odey, renowned as a bon viveur, is a tough, unsentimental operator driven by his rigorous pursuit of profit-making that must push his adrenaline to hitherto unknown heights.
Two years ago, I met this physically giant of a man when he came across from his table at Le Boudin Blanc in Mayfair where I was also lunching, to introduce himself telling me that we had something in common. Prudence Murdoch, the daughter of the global newspaper baron, who once worked for me, was indeed his first wife.
It was a very brief and pleasant encounter that eventually led to nowhere although he offered me his visiting card. Modern tycoons are not easily reachable these days and he is no exception. However, men like him in a free economy are part of the merry-go-round that inspires a new generation of future men of destiny without whom I reckon the world will become a duller place.
Having said that, I agree with Odey that the economy in 2016 will be a most challenging undertaking. I also fear that Britain’s overvalued sterling, predicted by many to lose some of its current value, will have a counter effect on our ability to balance the books. One may ask whether a new recession similar to 2008 is likely to put the clock back after a new wave of austerity measures is forcibly introduced.
No one in his right mind today will underestimate the problems that the next two years will bring in their wake. Given this bleak possibility it would be prudent to tighten our seat belts and stop squandering our resources when we can ill afford to play the good and the mighty for no apparent gain.
The days of such indulgence are truly over.