We reported back in November that Crispin Odey’s Odey Asset Management was in the midst of a rough fiscal 2015. As of the end of October, the London-based, Cayman-domiciled hedge fund had reported losses of 10.3% to investors, despite briefly reversing their early-year losses during a productive summer. That after coming off a record fiscal 2014, when the fund earned $271 million, tripling their profits from the previous year, and raised their assets under management to $12.4 billion from $8.3 billion.
All was not yet lost for the year however, and Odey ended up closing out the final two months of 2014 on a high note, and has carried that success into 2015. The fund, founded in 1991, and with an emphasis on long-short strategies, recently scored big on their short position against The Swatch Group SA.
The Swiss watchmaker has plummeted 20% since January 15, when the Swiss National Bank (SNB) announced they would no longer keep the Swiss Franc trading at artificially low levels. The currency almost immediately shot up 20% in value, dealing a massive blow to Swiss exporters and their stocks. Swatch announced just days later that they would be forced to raise the prices on some of their brands by 10% as a result. The SNB’s decision was a pleasantly unexpected surprise for Odey, whose short position in the stock was based on existing weaknesses they saw in the company’s prospects.
As discussed during their most recent quarterly presentation, the impending release of Apple Inc. (NASDAQ:AAPL)’s iWatch, as well as dwindling sales in China due to that government’s stronger anti-graft policies, both posed a serious threat to Swatch’s success. Odey had already experienced strong returns from their Swatch short throughout the second half of 2014, as the stock fell from $535.50 to $440.20. It is now down to $360.30 in Tuesday trading, down over 33% since June 30.
A fund on the opposite end of the Swatch spectrum was Tom Russo’s Gardner Russo & Gardner. The fund, which emphasizes investments in companies with strong global brands (like Swatch) which have the potential for expansion into emerging markets (like China), saw their Swatch holding of over 60,000 shares as of September 30 tumble in value. They added a moderate amount of Swatch shares to their portfolio during that quarter, raising their holding in the company by 3%.
In terms of investments, Odey Asset Management made some notable changes to its portfolio during the third quarter. Among them was a bump in their Apple holding by 18% to 292,809 shares, as they doubled down on their anticipation of the iWatch’s success. They also made a bigger move into United Rentals, Inc. (NYSE:URI), upping their holding by 19% during the quarter, to 816,003. The two companies would virtually switch places in value during the following quarter, effectively evening each other out, as United Rentals fell from $111 to $102, while Apple rose from $101 to $110.
Odey Asset Management’s top holdings for the quarter remained unchanged from the previous one however, with Delta Air Lines, Inc. (NYSE:DAL), D.R. Horton, Inc. (NYSE:DHI), and Signet Jewelers Ltd. (NYSE:SIG) occupying the top three positions in their portfolio. The ordering changed slightly, as Odey continued to slash their exposure to Delta, trimming their holding by another 28% after cutting it by 36% in the previous quarter, and 10% the quarter before that.
All told, they have sold off over half their Delta position over the past two filing quarters, which amounts to over 6.5 million shares in the company, taking profit from their investment in the airliner. The majority of their position was sold off for well over double the value of what it was worth when they amassed their position during the first quarter of 2013.
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