Odey Odessey Fund Down 9% in May


Odey Odessey Fund Down 9% in May

Odey Asset Management was founded in 1991. The London based hedge fund, now manages over $4 billion. George soros was one of the early investors.

The firm launched  the Odyssey fund in October, 2011.

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The Odey Odessey Fund was down 9% in May. Most of the drop was due to its equitiy exposure. It has 50% exposure to US equities which contributed to 4.3% of the loss, and 30% exposure to Japanese equities which cost the firm another 3.3%.

Global Equity markets have been experiencing a roller coaster ride currently, on the back of European crisis, a Chinese slow down, and weak US performance. Other hedge funds, such as Bill Ackman’s Pershing Square, and Dan Loeb’s Third Point, also experienced large losses in May.

The fund manager Tim Bond is bullish on the economy.

There are several signs of improvement outside Europe, inflation is falling giving a boost to real income. US order-inventory data is showing strong output potential. The US stock market appears cheap.

Chinese data for May also indicates signs of improvement. The pick-up in Chinese bank lending in May, along with stronger auto sales, slightly stronger real retail sales growth, a pick-up in infrastructure and manufacturing investment, a moderating slowdown in residential investment, and improved trends in both exports and imports all suggest a stabilizing economy.

Growth in Europe was flat as expected flat, but the biggest concern is the decline in net exports. This is due mostly to the collapse in intra-Euro zone trade. Government sector consumption has been declining in both Italy and Spain, but private sector  has contracted to a much greater degree. This is the main reason for over weakness in intra-Euro zone trade.

However, there are signs that ECB is slowly moving towards a more realistic easing policy. The prospect of the Euro zone finally acquiring an appropriate monetary policy is steadily improving.

For  the US, a sustained slowdown in hiring has been the main concern, threatening to slow labor income growth and weaken consumer spending. Fortunately this has been compensated by low oil prices. Job market data is showing signs of a recovery.

Within 3-4 months, there should be noticeable improvements in the performance of the major economies.  For China a pick up in lending and retail sales will act as a boost. The Euro zone will take action and stabilize. These factors will definitely uplift the investor’s sentiments, which in turn, will lift the equity market and improve the fund’s performance.

Among the top holdings of the fund are:

S&P500 futures short

Euro Stoxx 50 futures short

Nikkei 225 long

Berkshire Hathaway Long

Apple Inc. Long

Citigroup Long