Philippe Jabre and Jabre Capital’s Top Stock Picks

Philippe Jabre is one of Europe’s most famous hedge fund managers. He established his reputation as an inspired investor and risk taker in London from the mid-eighties to the late-nineties.

In 1997, Jabre joined the hedge fund GLG, which was only 2 years old then. He stayed with the fund, eventually becoming the managing director and making quite a name for himself as a risk taker, possibly unnecessarily large risks. Taking these risks brought him under investigation by the UK Financial Services Authority. While he was eventually cleared of market abuse, Jabre still faced a large fine and was placed on leave from GLG. Jabre used the time off to establish Jabre Capital in 2006, aftre his non-compete agreement with GLG expired.

Since then, Jabre has won two EuroHedge awards for his performance for his Jabre Capital, including a “Fund of the Year” award. However, that’s not to say that he doesn’t make mistakes. Earlier this year, Jabre bought up Japanese stocks then panicked when the market crashed further (read about it here); he sold just days before the Japanese market rebounded. The mistake cost Jabre Capital around $300 million and earned Jabre the label as one of the worst hedge fund managers.

In fairness, Jabre has had large losses since the end of the second quarter. He has call positions in Bank of America (BAC), which is down 43%, as well as call positions in United States Steel (X), which is down 41%. These call positions mean that he hasn’t lost as much as he would have in a traditional position, but the losses are still significant. Jeffrey Tannenbaum of Fir Tree also has call positions in Bank of America, as does Noam Gottesman (GLG Partners), whereas Mariner Investment Group holds call positions in U.S. Steel.

Luckily, Jabre has had a few successes since the end of June. His position in Newmont Mining Corp (NEM) returned a solid 13%; Ken Griffin of the prestigious Citadel Investment Group holds a large position in the company. Jabre also did well in gold. His position in Kinross Gold Corp (KGC) earned 8%.

Jabre is a strong hedge fund manager but he takes risks that may be too much for the average investor. We like him but private investors are warned to mirror his moves cautiously.