Odey’s Shorts Go A Long Way

Jan 20 2009 | 2:01am ET

Shorting British banks was very good business last year, while you could do it.

Odey Asset Management’s flagship Odey European fund posted an 11% return last year, while the average hedge fund suffered a double-digit decline. Another Odey fund, OEI Mac, did even better with a macro overlay on the European fund’s strategy, soaring 43%.

According to Odey CEO David Stewart, about one-fifth of the fund’s return came from its shorting. “By and large, the longs did badly and the shorts did very well.” In September, the U.K. Financial Services Authority barred short-selling of some financial stocks. That ban expired last week, although investors are still required to disclose short positions.

“We are definitely being labelled the bad boys, but as everyone knows, this financial crisis has come from a direction that no one predicted, apart from the bad boys,” Odey wrote to investors in October. “Credit lending built on air has crashed and is crashing to earth.”

Despite his own success, Odey told investors yesterday that last year “was a difficult year. As our shareholders remarked, it was not the year of the rat for nothing. If something could go wrong, it did go wrong.”

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