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Huge Year For Hugh Hendry's Anti-China Fund

Tyler Durden's picture




 

Unlike some of the more noteworthy fund managers who appear on our TV screens all too often, Hugh Hendry seems to have been head-down hard at work. The appropriately named Eclectica fund that he manages has had a stupendous year as The FT reports his 'China Short' fund is up over 52% for the year. We discussed his already-solid performance back in September, when he was up a mere 40% YTD following an exceptional month in September. Given the difficulties of shorting Chinese firms directly, the deeply contrarian manager who makes no apologies for his view of a 1920's Japan-like crash in China is clearly doing something right. His positions in Japanese entities with large Chinese exposures makes great sense and the fact that he has kept outperforming this quarter even as Japanese credit has rallied back quite impressively, from spike wides in September and October, seems testament to our TV-Appearance-to-Performance anti-correlation thesis.

 

Japanese Corporate credit spreads (above) spiked in late September and early October, which surely helped performance in the previous quarter but to have kept that performance going so well into the 4th quarter where things have been a lot less directional is impressive.

And during the same period, the cost of protecting China's debt (black line) grew rapidly in September and October but has stabilized, in an admittedly choppy way, at better levels - even as Chinese stocks (orange line) have continued to plummet.

Charts: Bloomberg

 

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Mon, 12/12/2011 - 14:30 | 1970940 FubarNation
FubarNation's picture

"I would recommend you panic."

-  Hugh Hendry

Mon, 12/12/2011 - 14:43 | 1970949 GeneMarchbanks
GeneMarchbanks's picture

Dark bird, bitchez!

"Wise man say, you do not invest in overcapacity"-Hugh Hendry

Mon, 12/12/2011 - 15:50 | 1971268 Pladizow
Pladizow's picture

HUGE Hendry for the Bitchez!

Would love to see him on US CNBS against the dummies!

Mon, 12/12/2011 - 14:40 | 1970989 slaughterer
slaughterer's picture

Hendry is usually too early, but in this instance his timing was excellent.  

Mon, 12/12/2011 - 14:46 | 1971007 The Big Ching-aso
The Big Ching-aso's picture

 

 

Well, well.    Huge Henry had a hugh year.

This is payback for how many times I've seen 'huge' spelled 'hugh' on the internet.   I feel better now.

Mon, 12/12/2011 - 17:35 | 1971687 Silver Bully
Silver Bully's picture

'Hendry is usually too early . . .'

Famously so. In fact, he's commented about it publicly, so he must be painfully aware. Looks like he finally figured out a happy medium. 52%!

Mon, 12/12/2011 - 14:56 | 1971032 vast-dom
vast-dom's picture

China, the sinkhole of earth. $kam nation game planet. Good job shorting the hole!

Mon, 12/12/2011 - 14:56 | 1971033 Clueless Economist
Clueless Economist's picture

The problem with Europe, is too little debt, not too much.

I propose that the EU print more fiat and really run up the debt levels.

--PK

Mon, 12/12/2011 - 14:30 | 1970942 Vergeltung
Vergeltung's picture

how much does he manage, I wonder. Very impressive, regardless!

 

Mon, 12/12/2011 - 14:38 | 1970983 jesus_quintana
jesus_quintana's picture

Not an enormous amount - less than £300m IIRC.

I met him back in Jan and had a chat about his 'China' fund, which seemed to involve nothing much more complicated than going about 8x levered on a basket of low-cost Japanese CDS (e.g. Tepco).

His take was, if something bad happens we'll make a lot of money; if not our investors will lose about 50% over 5 years. Two months later and BOOM: earthquake, tsunami etc.

Better lucky than good (though there's no doubt he's very, very good).

Mon, 12/12/2011 - 15:01 | 1971054 redux2redux
redux2redux's picture

How much of this was due to Japan's problems this year?

Mon, 12/12/2011 - 17:41 | 1971702 Silver Bully
Silver Bully's picture

Kinda curious about his bet on China through Japan. If I remember right, he stated that since he couldn't/wouldn't bet directly on chinese companies, he would do it indirectly through Japanese industry. Japanese companies were directly exposed to Chinese fluctuations, but I couldn't remember what exact sectors he mentioned (steel and commodities, I think?). Would be curious to know what companies/industries he bet on, more to see what got damaged by the tsnuami aftermath and what actually got banged by China.

Mon, 12/12/2011 - 14:33 | 1970963 moskov
moskov's picture

bernard madoff must be pround of him

Mon, 12/12/2011 - 14:34 | 1970966 Global Hunter
Global Hunter's picture

The only reason I'm rooting for him is because he says what he thinks when he's on the tv unlike most of the other braindead zombies.

Mon, 12/12/2011 - 15:47 | 1971277 Pythaes
Pythaes's picture

He never had alot either...and one day said "fuck it, i can do this"

Mon, 12/12/2011 - 14:34 | 1970971 Dick Darlington
Dick Darlington's picture

Nice one mr Hendry! So, working hard to dig the dirt in order to find great opportunities outside the reach of the "safe" consensus groupthink lemmings mongering in TV abt how equities will always and everywhere go only up can really pay off.

Hendry truly has been the Cock of the walk this year!

Mon, 12/12/2011 - 19:23 | 1971962 smiler03
smiler03's picture

The Eclectica Absolute Macro A GBP Accumulation Fund has...

An ETFS Physical Gold [LSE] holding of 6.88% 

I thought ZeroHedgers thought Gold ETFs were a strict no no? No? 

Mon, 12/12/2011 - 14:38 | 1970974 homer8043
homer8043's picture

Any advice on how to mimic this with thousands?

I have the Japan Bond ETF's on watch, but China seems much more timely.

Mon, 12/12/2011 - 14:42 | 1970994 mktsrmanipulated
mktsrmanipulated's picture

what is the symbol for the japanese bond etf

Mon, 12/12/2011 - 14:46 | 1971006 homer8043
homer8043's picture

JGBS is the -1x. JGBD is the -3x. Timing is everything with Japan.

Both are illiquid with wide spreads.

Mon, 12/12/2011 - 14:52 | 1971021 CvlDobd
CvlDobd's picture

Thanks for pointing those out.

I'll have to put the 1x on the radar.

Mon, 12/12/2011 - 15:20 | 1971138 mktsrmanipulated
mktsrmanipulated's picture

just on a note you do know the 3x funds are have major flaws in their construction they are pure decaying assets

Mon, 12/12/2011 - 16:52 | 1971555 homer8043
homer8043's picture

I agree. The -3x was for information. Timing Japan is impossible and -3x as you correctly pointed out, rape the holder over any decent holding periods.

Mon, 12/12/2011 - 14:53 | 1971024 onebir
onebir's picture

Been wondering the same thing ...

Hendry does have a mutual fund (http://www.eclectica-am.com/fundlist.aspx?target=fundlist)

Mon, 12/12/2011 - 15:40 | 1971238 lechmm
lechmm's picture

Put your money in CDs.

Mon, 12/12/2011 - 16:37 | 1971475 homer8043
homer8043's picture

If I were that bored, I'd buy a couple pounds of gold and be done.

Mon, 12/12/2011 - 14:37 | 1970980 bugs_
bugs_'s picture

Way to go Hugh!  Don't accept the CNBC invite!!

Mon, 12/12/2011 - 14:43 | 1970997 Josh Randall
Josh Randall's picture

I'm long on the Liesman anti-waste size index.

Mon, 12/12/2011 - 14:45 | 1971003 Kayman
Kayman's picture

Once China tied its ass to the USD, they screwed themselves.  Short term gain, long term pain.  The more they wriggle, the stucker they get.

Bernanke owns your tiny little Chicom soul, bitch. 

Thanks for the honest discourse, Hugh.

Mon, 12/12/2011 - 14:55 | 1971017 moskov
moskov's picture

Bernanke must be pround he made the record of walmart slaves and food stampers in the history of US.

China is Ok with that Long term pain if it can make US into a 3rd world hellhole in progress.

 

Mon, 12/12/2011 - 23:56 | 1972685 StychoKiller
StychoKiller's picture

Br'er Rabbit fights the tar-baby (who's gonna win?) :>D

Mon, 12/12/2011 - 14:54 | 1971028 MonkeySmoke
MonkeySmoke's picture

Another pair of Bears discussing MFing Global and the OTC market--allegedly.

http://www.youtube.com/watch?v=jLt05sN7vK0&feature=player_embedded

Mon, 12/12/2011 - 14:57 | 1971035 Mark123
Mark123's picture

Glad to see he is doing well for his clients, since he bases his investment decisions on logic and not hope and the belief in financial wizardry. 

 

Will be interesting to see if they let the Dow close below 12K today.

Mon, 12/12/2011 - 15:04 | 1971067 JW n FL
JW n FL's picture

 

 

I have tried to share with you people.. but no one wanted to hear it.. and that is going back before Hugh was on YouTube!

Mon, 12/12/2011 - 15:33 | 1971202 Saro
Saro's picture

Investment hipster?

Mon, 12/12/2011 - 16:05 | 1971356 JW n FL
JW n FL's picture

 

 

I am still angry from 2007 when then President Bush would not let us bring back cash!

Mon, 12/12/2011 - 15:28 | 1971181 junkyardjack
junkyardjack's picture

How is Traxis Partners doing?

Mon, 12/12/2011 - 15:39 | 1971227 lechmm
lechmm's picture

DELETED

Mon, 12/12/2011 - 19:18 | 1971943 Monedas
Monedas's picture

Barney Frank's been "head down hard at work" too ? He's also been butt high in the receiving line !

Mon, 12/12/2011 - 20:12 | 1972112 WhiteNight123129
WhiteNight123129's picture

Short VALE Bitchez!

 

Sun, 12/18/2011 - 11:17 | 1991390 ThrivingAdmistC...
ThrivingAdmistCollapse's picture

China's economic is going to stagnate sooner or later.  You can't have 10% growth to infinity.  Sooner or later that kind of growth is going to collapse into more reasonable levels.  Now can China's social system handle 4-5% growth levels without imploding?  That is a key question.

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