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%.