Investment Greats: Crispin Odey

Published in Investing Strategy on 2 October 2009

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.

Track record

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.

Investment style

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.

Current opinions

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.

More investing greats:

John Bogle | George Soros | Ben Graham | Jim Rogers | Warren Buffett | Anthony Bolton | Jesse Livermore | Jim Slater | Charlie Munger | Peter Lynch | Carl Icahn | Philip Fisher | Ken Fisher | John Neff | John Templeton | Mark Mobius | Neil Woodford | T. Rowe Price | Bill Miller | Robin Geffen | David Dreman | Ian Rushbrook | James Montier | John Paulson | Seth Klarman | Martin Zweig

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The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

mikefour 05 Oct 2009 , 4:51pm

Anybody who would siphon off £28m from a Fund for himself would be one reason I would not invest. So, I'm out.

2381nickp 05 Oct 2009 , 4:55pm

It is people in the financial industry who believe they are worth these sort of obscene bonuses that have brought the whole business into disrepute.

Fool1326675509 21 Oct 2009 , 9:54am

It is sad to see people have the views expressed above. The fact that someone builds their business over a period of 18 years and only gets paid if he performs for his investors seems to hold no relevance to the above commentators. If Mr Odey had built a business producing widgets with the same results I am sure the comments would be totally different. Sadly the commentators obviously have no idea of the hard work and risk business owners take and their comments are mis-directed at the wrong people. Anyone who is "siphoning" off money has only been paid as he has made good investments for his investors who take 80% of the gains. You stick to investing in badly run companies and leave the good ones to us.

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