Prominent UK hedge fund manager, Crispin Odey, has become one of the biggest bears over the past year or so as he worries that China is nearing collapse. Perhaps the most difficult trade for a hedge fund manager to hit consistently the target is short exposure in a portfolio. On a statistical basis considering on monthly win percentage, the lowest performing of the two directional strategies in a long / short hedge fund is the short book. Preparing for a negative shock is never easy, as hedge fund manager Crispen Odey rudely discovered in the fall of 2015. His nearly $2.5 billion Odey…
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- Nailing the short exposure is the most challenging aspect of hedge fund long / short ratio management
- Odey points to the need for his short exposure
- Central bank intervention has led to improper capital allocation decisions that will come back to bite
- Odey, eyeing the end of artificial stimulation, points to capital mis-allocation as "hope" appears to be at play in a lender's risk management scheme
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