Yikes! Crispin Odey likes Ben Bernanke and his fiscal policy, at least more than other hedge fund managers can stomach and certainly more than he likes Mervyn King’s. In his last letter written just a week before the Fed’s June 19 meeting, Odey was hopeful that Bernanke would not hint on tapering again, not until a full economic recovery is in picture. He expected bond yields to fall and markets to rally in response to a favorable announcement, but not only did that not happen but China’s shibor rates spiked to highest ever levels, culminating in selloffs in Europe, emerging markets, Asia and the U.S. Have a look at what Crispin Odey said in his Q1 conference call.

Odey European Gains in May From Short JGBs, AUD and Diageo

Odey’s May Returns

His thesis on the Fed may be off the target, but Odey’s funds certainly beat all competition in the field. Odey Asset Management’s OEI MAC which invests in the flagship fund Odey European Inc, returned 6.5 percent in May. OEI MAC manages $886 million whereas Odey European as a whole manages $2.18 billion. Odey European’s largest macro positions are in U.K., Japanese and U.S. government bonds, the fund is short on long term Gilt futures, 10yr JGBS and U.S. Long Bonds CBT. These short positions in government bonds and others added a +0.9 percent return in the month.

Odey: Performance in Equity Book

As is the case with the short book, OEI MAC was down 3.3 percent in its short portfolio—detracting shorts of the fund were in automakers Peugeot SA (OTCMKTS:PEUGY) and (EPA:UG), Fiat S.p.A. (OTCMKTS:FIATY) (BIT:F). We have mentioned how automakers in Europe have continued to outperform in stock markets despite of declining sales in the region. The fund also incurred losses in its bearish bet on ArcelorMittal (NYSE:MT) which rose 1.3 percent in May. OEI was up in its short in Commerzbank AG (OTCMKTS:CRZBY), Germany’s largest lender. The bank announced over 5000 job cuts this week as part of its restructuring program, Steve Cohen’s SAC Capital also gained on his negative position in Commerzbank AG (ADR) (OTCMKTS:CRZBY) last month.

OEI was also up in Diageo plc (NYSE:DEO) (LON:DGE), whose share price lost 3.2 percent in May. Diageo plc is involved in the alcoholic drinks business, one of the largest players of the industry.

In the currency book, OEI gained from shorts in AUD and ZAR against USD (see Stanley Druckenmiller Following Soros into Australian Dollar Short?), while losing in shorts in EUR against USD. The long equity portfolio gained 9.1 percent in May, highest gains came from long positions in the banking sector. OEI was up in Barclays PLC (NYSE:BCS) (LON:BARC), Sky Deutschland AG (FRA:SKYD), Sports Direct International Plc (LON:SPD) and of course, Ocado Group PLC (LON:OCDO).