Odey Goes Long Spanish, Italian and Portuguese Sovereign Debt

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We have repeatedly seen Odey Asset Management’s funds in several of the top performing hedge fund lists of 2012, including our own. Odey European returned 27.89 percent YTD through 14 December 2013 and manages $1.4 billion in assets while Odey Absolute Return was up 33.3 percent till November of last year. The flagship Odey funds is its Equity Long/Short.

Odey Goes Long Spanish, Italian and Portuguese Sovereign Debt

The more recent numbers from Crispin Odey’s Odyssey and OPUS fund also speak of similar brilliant returns generated in the last month of 2012. Odey OPUS fund added a 2.6 percent gain and ended the year up 19.5 percent overall while the Odyssey fund added a 2.8 percent return, finishing the year at +13.9 percent.

Unlike several others who are not so thrilled with Bernanke’s incessant monetary easing, Odey tends to sympathize with his predicament and believes that he is doing the best he can and coming off much better than Mervyn King, Governor of the Bank of England.

Odey also agrees that Federal Reserve and its policies cannot be relied on to find real growth in economy. The job of the central body is to keep the ship afloat and avoid recession. The stimulants for growth and development come from creative business ideas, education, taxation and better regulation, something that does not lie in the hands of the Fed.

Moving on to which positions created big gains for Odey OPUS fund, the fund profited from KB Home (NYSE:KBH) and Sports Direct International Plc (LON:SPD) while losing in BP plc (ADR) (NYSE:BP) and British Sky Broadcasting Group plc (LON:BSY).

The Odey Odyssey Fund, managed by Tim Bond, has long positions in sovereign debt of European periphery countries. Lately these kind of positions have become very common. Several others including Tiger cub Argonaut Capital and North Asset Management’s MaxQ fund are betting that sovereign bonds will boost in the next couple of months, thanks to ECB Bancorp, Inc. (NYSEAMEX:ECBE)’s Outright Monetary Transactions (OMT) program.

Hedge funds are aggressively buying debt in Portugal, Spain and Italy. Odey Odyssey’s outlook for this year is positive for EMs, China, Europe and US. The fund has highest exposure in US followed by Spain and Italy. Its largest holdings are in Spanish IBEX 35 Index Futures, Long term Italian government bonds BTPS and Portuguese government bonds.

The fund also has exposure in NIKKEI 225 (INDEXNIKKEI:NI225) and long term Spanish sovereign bonds. In equities, large long holdings include, Signet Jewelers Ltd. (NYSE:SIG), BHP Billiton plc (NYSE:BBL) (LON:BLT), Rio Tinto plc (NYSE:RIO) (LON:RIO) and Travis Perkins plc (LON:TPK).

Odey OPUS manages $508.5 million while Odey Odyssey has $137 million under management.

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