I have the ability to remain in an uncomfortable place for an uncomfortable amount of time, Crispin Odey told Bloomberg last year. It was a reference to his investing style and stunning comeback from years of successive losses. With the company that bears his name imploding, days after he was ousted amid allegations of sexual harassment and assault, that sentiment is about to be tested.
Odeys three-decade run as one of Londons most famed and controversial hedge fund managers has come to a screeching halt. Within the space of a week he has gone from celebrating his best ever year of performance to having to watch from the sidelines as the firm he founded is broken up.
The dramatic fall from grace caps a career punctuated by extreme performance highs and lows. A notoriously contrarian investor, Odey, 64, made a name for himself as an extreme risk taker, who produced spectacular gains but also outsized losses.
Odey Asset Management LLP, the firm, which he created in 1991, at one point ran as much as $13 billion of assets. That had fallen to about $4.3 billion before the recent allegations prompted investors to pull their funds as service providers, including Morgan Stanley and Goldman Sachs Group Inc, severed ties.
The reckoning for Odey was triggered by the publication last Thursday of a Financial Times investigation into his treatment of women over a 25-year period that included multiple allegations of sexual harassment and assault. Women have described crude remarks, unwanted touching and unwelcome proposals to be his mistress, according to those who spoke to Bloomberg News. Thirteen women told the Financial Times of harassment or abuse, eight of whom alleged he sexually assaulted them.
The accusations followed similar reports in the two years since he was acquitted of a sexual assault charge in a British court in 2021. Subsequently, two women came forward to Bloomberg, another went to the Times of London newspaper. Additional accounts appeared in a Tortoise Media podcast.
Odey denies the allegations. He did not respond to multiple calls and texts seeking comment for this story.
The implosion of Odey Asset Management has been a stark reminder for investors how much attention should be paid to key-man risk, said Berlin-based Harald Berlinicke, the chief investment officer of Max-Berlinicke-Erben family office. It is often conveniently ignored. Most of the time, the bill never arrives but when it does, investors are usually scratching their heads over how much they have to pay.
An Empty Suitcase
Odey was born in January 1959 in Yorkshire, northern England, to the son of a Tory MP and a mother who came from a prominent business family. He was educated at Harrow, an elite private boys school, read history and economics at the University of Oxford and later, on the insistence of his grandfather, joined the bar.
In 1983 he quit law to work in the City of London, firstly at Framlington Fund Manager and later at Barings International. The decision angered his grandfather, according to Odey.
My grandfather disliked the City and he wasnt used to being countermanded, so he got annoyed, Odey told the Evening Standard in 2012. He left me nothing in his will but an empty suitcase.
His marriage in 1991 to Nichola Pease launched him firmly into Londons financial elite. Pease, whose father was chairman of Yorkshire Bank and vice-chairman of Barclays, enjoyed a stellar career in investment banking and asset management. They were soon marked out as a powerful couple in Londons financial circles. The couple divorced after the 2021 assault case acquittal.
Having analyzed, known and observed, Crispin Odey for over 20 years I see him as an extremely bright and cerebral fund manager with strong views based on good analysis and experience which is reflected in his track record, said Jacob Schmidt, who runs the investment advisory firm Schmidt Research Partners. Though often too eccentric for me and our investors.
As his wealth grew his fortune was last valued in the Sunday Times Rich List in 2020 at 825 million so did his influence. Either personally, or via his company, Odey has donated at least 1.7 million to UK political parties, the bulk channeled to the Conservative Party and pro-Brexit campaigns, according to the Electoral Commission.
Unlike most hedge fund managers, who are notoriously low profile, Odey is often quoted in the press with comments spanning markets and politics, especially regarding his support of Brexit. He has emerged as one of the most vocal critics of central banks and frequently lambastes UK politicians.
His monthly commentary to investors is widely tracked for his market predictions, the most noteworthy of which failed to come true and he suffered years of losses before a stunning turnaround in his flagship hedge fund that started in 2021.
In 2022, he enjoyed his best year of performance in his Odey European Inc. hedge fund, with returns of 152% powered mainly by his highly leveraged short wagers on long-dated UK government bonds as inflation and political turmoil roiled the British economy.
Crispin Odey, with his larger-than-life personality, was undoubtedly a formidable force in the hedge fund world, said Bruno Schneller, managing director at Swiss based INVICO Asset Management AG.
Rapid Unwinding
Within hours of the FT report, the firms banking relationships were put under review and investors started making redemption requests. The firm, in full crisis management mode, did the most dramatic thing possible in an effort to stem the bleeding: it severed all links with its founder. In letters to clients over the weekend, the investment firm emphasized that Odey no longer had any economic or personal involvement in the partnership despite previously owning, according to UK Companies House filings, at least 75% of the firms voting rights.
While swift, the ousting of Odey on Saturday morning didnt come in time to stop Morgan Stanley from jumping ship. JPMorgan Chase and Co. and Goldman, had by that stage begun reviews of their relationships with the hedge fund.
Goldman managing directors met with senior Odey staff last weekend, according to a person familiar with the discussions, who asked not to be identified. Following the meetings the bank ended its relationship with the firm. JPMorgan is expected to follow suit.
On Wednesday, politicians sought answers from the UK financial regulator about its supervision of the firm. The Financial Conduct Authority has spent two years looking into Odeys conduct but the full extent of its investigation has yet to be revealed.
Less than 24 hours later, the firm was preparing for its endgame. We have been, and remain in constructive dialogue with our service providers and key counterparties, Odey Asset Management said in a letter to investors seen by Bloomberg News. It has however become clear that some investment management activities of the partnership are affected by recent events.
The investment firm said it was in advanced discussions with other asset managers to find a new home for its funds and some of its staff.
Odeys offices, located on a quiet street in Londons Mayfair district, sit next door to other investment firms and luxury private residences, and just a three-minute walk from Hyde Park. Le Gavroche, the two Michelin-star restaurant where Odey reportedly is a lunchtime regular, is across the street.
In the early part of this week, passers-by stopped briefly to take a look at the offices gold-colored door plate and ponder why journalists were standing outside. By Thursday afternoon there were fewer spectators. Instead there were plenty of comings and goings with senior fund managers including Mathieu Rachmaninoff, who politely declined to talk to Bloomberg, and Oliver Kelton both entering the building alongside the head of IT.
Odey hasnt been seen at the office for several days, according to a porter working at a private residence nearby, who asked not to be identified.
Hedge funds have spent a decade showing the world that they can build durable, diversified businesses, said Andrew Beer, founder of Dynamic Beta Investments. Odey will be held up as the counterpoint.
