It is becoming a custom with Odey Asset Management to short and then go long on the same holding or vice versa. OEI MAC, one of the funds that invests in Odey’s flagship Odey European, mentions Toyota Motor Corporation (NYSE:TM) (TYO:7203) as a short bet in the latest monthly letter.

Crispin Odey

Odey long and short Toyota?

OEI MAC netted a 0.7% gain in October, bringing up the year-to-date return to 17.8%. The fund profited on a Toyota Motor Corporation (NYSE:TM) (TYO:7203) short bet as the stock declined in October. Odey Asset Management has several shorts disclosed in automakers; the fund has turned decidedly bearish on the auto industry over the past few months. Other than the short in Toyota, Odey is also betting against Volkswagen AG (OTCMKTS:VLKAY) (ETR:VOW) (FRA:VOW), Peugeot SA (OTCMKTS:PEUGY) (EPA:UG) and Fiat S.p.A. (OTCMKTS:FIATY) (BIT:F).

While switching from a long to short thesis is not unheard of, Odey has been doing it at a faster pace than others. According to the quarterly review, Odey European was long on Toyota Motor Corporation (NYSE:TM) (TYO:7203) at the end of Q1, and the position made up 1.6% of the fund’s assets. According to the 13F filing for Q3, Odey Asset Management held 75k shares of the company. So if the fund has not exited the long in October, Odey seems to be a long and short for the same stock from different pockets of the firm.

Gains in long book

OEI MAC gave back its gains when Aberdeen Asset Management plc (LON:ADN), Associated British Foods plc (LON:ABF) and AngloGold Ashanti Limited (NYSE:AU) gained in the market, as the fund was shorting these companies.

In the long book OEI MAC gained from Pendragon PLC (LON:PDG), Sky Deutschland AG (FRA:SKYD) (ETR:SKYD), Delta Air Lines, Inc. (NYSE:DAL), Barclays PLC (NYSE:BCS) (LON:BARC) and BP plc (NYSE:BP) (LON:BP). Losses were incurred in Sports Direct International Plc (LON:SPD) and Ericsson (NASDAQ:ERIC) over the same period.

Low interest rates

In the monthly commentary, Crispin Odey once again voiced his support for an easy monetary policy. He is satisfied with Janet Yellen’s assertion that interest rates would be kept low as long as the U.S. economy shows substantial growth. Odey is of the opinion that the improvement in jobs data is from growth in non-vital sectors, like hospitality and leisure. He adds,

“It is worth reminding investors that this current recovery in employment has mostly been in the leisure and hospitality industries, with only 25% of the employment growth coming from the hi-tech and industrial industries. Financial repression should only end when the economy is on fire.”

Odey is also especially bullish on the U.S. against Europe, the successful hedge fund manager thinks the U.S is growing at a faster pace than the Eurozone and therefore deserves higher weighting in the portfolio, the letter notes,

Whilst others can argue that European competitors start with lower margins, I want exposure to the economy that I can see growing. Whirlpool beats Electrolux, Paccar and Navistar beat Volvo Trucks.”

Odey thinks that the Federal Reserve has greater room to experiment and a stronger base of experience than the ECB. He goes on to elaborate that the housing bubble which caused the crisis in the first place in the U.S has been repaired but the uncertainty around the euro and credit inflation in the Eurozone still hasn’t been resolved yet.