Woodbine Capital is Long Gold, Short the Yen and Euro

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Woodbine Capital is Long Gold, Short the Yen and Euro


Woodbine Capital is a hedge fund founded by two ex-Soros traders. In October, 2011 we detailed the firm’s positions, which consisted mostly of currency and  futures.

The fund’s largest positions in October 2011 were long euro against the Swiss franc, long Euribor, and short euro against the Danish kroner.

In April, sources told us that Woodbine Capital returned –2.0% for the month. YTD the fund is down slightly more at –2.20% return.

The fund continues to remain bearish on the global economy. They note that US employment numbers are weak, and the economy does not appear to be able to grow without extra stimulus. Furthermore, barring a rise in unemployment, the Federal Reserve will refrain from easing, which is a big negative going forward for the markets.

PMI is slowing worldwide, and Europe is an area of major concern. The recent elections add to the uncertainty and the difficulties facing the region.

Although China is not front page news, the numbers coming out are weak, and the banks are still saddled with bad loans.

With these assumptions in mind, the firm holds the following positions. It is long gold, Mexican and Brazilian rates on the assumption that the CB will lower rates or keep them flat.

They also are short the Euro versus the Canadian dollar and British pound, the yen versus the dollar.

The Yen should weaken as the result of the country running more trade deficits. The possibility of a VAT tax raise is also an area of concern.

The hedge fund managers think that the euro still has room to fall. Due to policies in the US which make the movement of the dollar unpredictable they prefer other currencies as part of the trade. While the UK’s economy is not the CB seems willing to defend the pound, and Canada is in good fiscal shape.

The fund is short several sovereign credit default swaps to offset risk related to company specific long CDS positions.

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