‘Bad boy’ hedge-fund manager Crispin Odey nets £30m

Date: Monday, December 14, 2009
Author: Kate Walsh, Times Online

CRISPIN ODEY, the hedge-fund manager, is to pay himself £30.4m after his firm made a fortune betting on the near collapse of the UK banking system last year.

The extraordinary figure is almost half Odey Asset Management’s £68.4m profit pool, according to accounts to be filed tomorrow. The rest will be shared by its star managers, including Feras Al-Chalabi, a 33-year-old Oxford graduate.

Odey, whose firm manages $6.2 billion (£3.8 billion) of assets, will escape the 50% windfall tax introduced in the pre-budget report as this does not apply to hedge funds.

He is one of a small band of managers who sold bank shares at the top of the market, only to buy them back at the bottom. The firm, which operates from a Georgian townhouse in Mayfair, made £23.4m in management fees and £55.8m in performance fees.

Odey, 50, has admitted he was seen as one of the “bad boys” for short-selling the banks, including Bradford & Bingley. However, he was one of the first managers to turn positive on financials, buying shares in Barclays in January. He now fears that the bull market may be coming to an end.

“The future looks no more stable to me than it did pre-bust. In 2006 we saw reefs ahead as bank managements, politicians and regulators sailed straight for them,” he said. “Today we hear the seas breaking on more reefs but this time they are covered in fog. Expect big swings.”

David Stewart, Odey’s chief executive, was keen to differentiate between hedge-fund managers and bankers: “We are aligned with the interests of our clients, a third of whom are UK pension funds.

“We are heavily invested in the funds ourselves and, unlike the banks, we receive no performance fees until the money has been made by our savers.”

He added: “The UK should not deny success. Wealth generation is a part of our economy and if we deny that we will become a communist state.”