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Hugh Hendry Fund Soars 40% YTD As China Sinks

Tyler Durden's picture




 

It has been a while since we heard anything about everyone's favorite contrarian and most outspoken hedge fund manager, Hugh Hendry, and probably for a good reason. As everyone else was complaining about their performance (and P&L) collapsing, blaming it on everything from the weather, to Bernanke's diet, to fundmanetals and technicals, Hugh Hendry was raking it in and is now up 38.65% YTD, with a stunning +22.5% in August alone (or pretty much mirroring the collapse at Paulson & Co) and another 11% in September! As the FT reports, Hugh Hendry's Eclectica fund has "has soared in value over the past two months as global markets have plummeted and industry peers have suffered damaging losses." Hendry's opinion on China is no secret, with an indicative snippet being that he anticipates a 1920's Japan-like crash in China. And as was reported previously, based on his recent trade of buying up lost of Japan CDS of companies exposed to China, his outperformance is no suprise. Expect to hear much more about Hendry as the media gets tired of paraphrasing sob stories and actually focuses on the (very few) winners from the most recent market blow out, confirming that contrarian, non-lemming approaches to investing still do pay off.

From the FT:

Mr Hendry - a former Odey Asset Management trader - is one of only a handful of hedge fund managers positioned against Chinese growth and therefore pitted against heavyweight investors such as Anthony Bolton. 

 

The fund, which raised a modest $150m from a handful of London investors when it launched late last year is up 38.65 per cent so far this year, having returned 22.5 per cent in August - the hedge fund industry’s worst month since the collapse of Lehman Brothers three years ago.

 

The news comes as concerns of a Chinese slowdown gather speed. Wu Xiaoling, the former deputy central bank governor and vice director of the finance and economy committee of the National People’s Congress said the economy would cool next year and efforts to spur growth will be constrained by inflation, in an article published by the Chinese central bank’s official newspaper.

 

Mr Hendry’s fund is up a further 11 per cent for September, according to an investor. Mr Hendry declined to comment.

 

His flagship Eclectica fund has had a short position against Japanese corporate credit for some time, but the strategy was only broken out as a seperate specialist fund 12 months ago.

 

China bulls have had a rough ride so far this year, however. Mr Bolton, one of the most notable, raised $743m for his Fidelity China fund in 2010, but was forced to admit in June that returns for his fund had been “disappointing”.

h/t Tim

 

 

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Mon, 09/19/2011 - 10:26 | 1684409 speconomist
speconomist's picture

I'd recommend you panic! Specially if you're a Keynesian.

Mon, 09/19/2011 - 10:35 | 1684454 Soul Train
Soul Train's picture

His results are proof positive that minute traders are nothing but maniacs.

He actually holds positions longer than a morning and look at this results!

Mon, 09/19/2011 - 10:47 | 1684524 Sancho Ponzi
Sancho Ponzi's picture

'I'd short Obama if I could'

Mon, 09/19/2011 - 17:14 | 1686200 mkkby
mkkby's picture

That quote is a classic, and Hendry deserves a lot of credit for his courage to go against the herd.

Mon, 09/19/2011 - 10:27 | 1684411 Pladizow
Pladizow's picture

.

Mon, 09/19/2011 - 10:27 | 1684413 speconomist
speconomist's picture

Indeed, haven't seen any new appearance of him in either BBC or other channel in Youtube.

Mon, 09/19/2011 - 10:29 | 1684429 Dick Darlington
Dick Darlington's picture

He's been busy investing while the losers have been trying to talk their books on msm.

Mon, 09/19/2011 - 10:59 | 1684581 kito
kito's picture

pladizow bring back the breasts!!!!!!!!!!

Mon, 09/19/2011 - 10:28 | 1684417 Dick Darlington
Dick Darlington's picture

Respect for the man!

Mon, 09/19/2011 - 10:28 | 1684422 bob_dabolina
bob_dabolina's picture

I love that guy

Mon, 09/19/2011 - 10:31 | 1684432 fdisk
fdisk's picture

What is the Symbol for that fund?

Mon, 09/19/2011 - 10:44 | 1684507 Pladizow
Pladizow's picture

Its a hedge fund, not a mutual fund!

But if it did have a symbol, it may be a big middle finger!

Mon, 09/19/2011 - 10:32 | 1684436 lolmao500
lolmao500's picture

He kicks butts.

Mon, 09/19/2011 - 10:33 | 1684440 scatterbrains
scatterbrains's picture

This news wont stop the Chinese Real estate bufoons.. I mean tycoons from buying all our Mall properties here in the state will it ?

 

Mon, 09/19/2011 - 11:21 | 1684716 whoisjohngalt11
whoisjohngalt11's picture

yea mall properties are great investments especially if you want to go see gang bangers hanging out, which ofcourse shuts down all the upscale clients before the mall shutters the doors. They should be buying up the walmarts.

Mon, 09/19/2011 - 10:35 | 1684451 kito
kito's picture

ill take jim rogers word over his. jimmy still very bullish china.

Mon, 09/19/2011 - 10:39 | 1684489 bob_dabolina
bob_dabolina's picture

How are his Treasury shorts doing?

Mon, 09/19/2011 - 10:52 | 1684553 kito
kito's picture

not as well on his short on bac, and not as well as his commodities call since 2000 when gold was 300 bucks and silver was, what, 4 dollars? and not as well as his his rmb call which continues to gain against the dollar every year and will absolutely explode once its depegged. the man moved to asia years ago, declaring the end of the u.s. id say he has been pretty prescient so far. and when the u.s. is in total upheaval within the next year or two, id say he will be just fine, watching the chaos from his treadmill in singapore.

Mon, 09/19/2011 - 10:39 | 1684490 Soul Train
Soul Train's picture

Jim is OK, but I've heard so many of his sure bet forecasts not pan out.

Like he predicted and said he held large positions short the GBP when it was at 1.35 and predicted a crash. Never came close to happening. In fact, it never dropped below the price during his interview.

Just something to think about.

We are all human.

China has its issues. I travel there a lot. And real estate is one of them. So are the masses and political dysfunction.

Mon, 09/19/2011 - 11:32 | 1684782 Young
Young's picture

Jim's stable and very long term. He admits there's a housing bubble developing in coastal cities and is short emerging markets and tech. Looking at his portfolio overall, it should be up. Looking at the bond position, that sucker's gonna come around real soon (If you're not in the deflationist camp), it's always hell fighting a strong uptrend and the Bernankster.

Mon, 09/19/2011 - 12:46 | 1685118 DosZap
DosZap's picture

kito,

I would prefer to take the PROFITS.

Mon, 09/19/2011 - 13:44 | 1685345 AustriAnnie
AustriAnnie's picture

Jim bullish LONG TERM in China.  He has said many times he is not a short term investor, and expects that China will have busts in the process, but that he is still bullish China long-term.

Mon, 09/19/2011 - 14:58 | 1685638 DosZap
DosZap's picture

AustriAnnie,

How can you not be LONG term bullish on China.

1.2 Billion consumers in the wings.........................

Plus,

http://www.bloomberg.com/news/2011-09-19/china-s-gold-investment-to-top-record-cheng.html

Mon, 09/19/2011 - 19:12 | 1686574 ImnotPOTUS
ImnotPOTUS's picture

You can be LONG CHINA but you had better short yourself at the same time if you plan to live long someplace else.

Jim Rogers moved to Singapore. So he is kind of' talking his book on CHINA. He has looked at the balance of the math and picked China as ending up in the plus column.

I believe Hendry is not sold on that bet and neither am I. The sum total of BTU's (energy) that can be produced going forward economically (ie. getting more out than you put in) is finite. That total cannot be equitably shared among 7 billion people. It just can't.

This pending disaster is not about who's debt/fiat has value, it is about who's debt/fiat will be able to acquire enough BTU's to keep the wheels turning.

This looming balance sheet collapse will reduce that number in the losers' side of the balance sheet by several billion. And this is me putting a positive spin on things being worked out by rational leadership going forward. If the lunatics running the asylums now, stay on, we are in for a lot worse.

 

Mon, 09/19/2011 - 10:37 | 1684472 DavidC
DavidC's picture

Good on you Hugh.

DavidC

Mon, 09/19/2011 - 10:47 | 1684511 misterc
misterc's picture

The wise man not invest in overcapacity, Konfuze says

(c) Hugh Hendry

 

Look at all these high class-hotels in Shanghai. Who bothers to sleep there?
It's a textbook-version of a bubble.

Mon, 09/19/2011 - 10:50 | 1684544 frugartarian
frugartarian's picture

well deserved...

Mon, 09/19/2011 - 10:56 | 1684566 Ryman1075
Ryman1075's picture

I was just watching this on CNBC waiting for him...did anybody else notice the "all seeing eye" in the "A" in marketwatch?

Mon, 09/19/2011 - 11:05 | 1684605 speconomist
speconomist's picture

woot??

Mon, 09/19/2011 - 11:04 | 1684599 monopoly
monopoly's picture

There are always winners and losers, and this year it is him. Have to admit AAPL just an amazing company. Stock down .90 cents and within a couple of dollars of all time high. I guess it pays to have 0 debt, 80+ billion in cash and a product line that people love. Makes no difference if you love them or hate them, they are a solid company.

You think at some point today these wonderful traders start pricing in Wednesday morning and the market moves higher. Just sitting here and like what I got.

Mon, 09/19/2011 - 11:30 | 1684765 Richard Whitney
Richard Whitney's picture

I think someone else on this site would post:

"FXP, bitchez!"

Mon, 09/19/2011 - 11:30 | 1684775 PulauHantu29
PulauHantu29's picture

The 0.001% Bernank gives us on savings doesn't come near the 40% this guy has earned.

Mon, 09/19/2011 - 12:02 | 1684923 Narcolepzzzzzz
Narcolepzzzzzz's picture

Hendry in China, March 2009:

http://www.youtube.com/watch?v=ektMQGbW3wk

Mon, 09/19/2011 - 12:04 | 1684934 shortus cynicus
shortus cynicus's picture

Make it slowly, have more fun.

Thinking beats doing (this time).

Mon, 09/19/2011 - 12:06 | 1684937 Zola
Zola's picture

Wasnt this guy heavy long treasuries into last year 2nd half ???... Please post returns for last year as well tyler...

Mon, 09/19/2011 - 12:11 | 1684955 unky
unky's picture

I think if you just bought Gold or Silver and did nothing else you are also up quite a percentage year to date.

Mon, 09/19/2011 - 12:15 | 1684966 reader2010
reader2010's picture

The Anglo-Saxon banking cartel has long planned and been implenting to moving their chief blood-sucking operations to China more than 20 years back. The Chinks are the slaves now that have two masters now because they are co-owned. Jim Rogers is absolutely right on this fact.

Mon, 09/19/2011 - 12:19 | 1684996 JW n FL
JW n FL's picture

 

reader2010

The Anglo-Saxon banking cartel has long planned and been implenting to moving their chief blood-sucking operations to China more than 20 years back. The Chinks are the slaves now that have two masters now because they are co-owned. Jim Rogers is absolutely right on this fact.

 

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Mon, 09/19/2011 - 12:26 | 1685027 reader2010
reader2010's picture

Here comes a surprise

 

China Reform Monitor No. 919 September 15, 2011
American Foreign Policy Council, Washington, DC

--

In the last five years, 500,000 to 600,000 Russian citizens have left for China to evade being “milked to death” by Russian tax collectors. Many small businesses under pressure from Russia’s Federal Tax Service have closed their doors and moved to major Chinese cities in that country’s northeast, including Harbin, Beijing, Dalian and Shenyang. It is nearly impossible for Russians to obtain a permanent a residence permit in China; instead they rely on renewing business visas. “Working in Russia is proving to be more impossible, uglier, and more repugnant even taking into account all the fears associated with China,” the Russian newspaper Novaya Gazeta reports. Russian students are also leaving in large numbers for Chinese universities since the tuition prices are lower and job prospects are better. Pensioners in Blagoveshchensk, Amur Oblast are also renting or selling their homes and using the money to buy better homes in Heihe, Heilongjiang where apartments are “many times cheaper.” The article concludes that in Moscow, the Chinese migration into Siberia is taken more seriously than in Siberia where “many people would certainly not be averse to the Chinese finally shooting the bureaucratic crooks on the city squares. Let the Chinese live, for in the consciousness of a great many Siberians and Far Easterners, China is changing from our problem to an advantage.”

Mon, 09/19/2011 - 14:20 | 1685482 JW n FL
JW n FL's picture

 

 

http://www.youtube.com/watch?v=vZjmlLyefgI

Russian oligarch punches rival in TV Presidential Debate

Mon, 09/19/2011 - 15:02 | 1685652 Cathartes Aura
Cathartes Aura's picture

with all this "business migration" going on, as people seek "cheaper" places to live or make money, looks like gllobalisation / cultural integration is moving right along. . .

Mon, 09/19/2011 - 12:28 | 1685040 slewie the pi-rat
slewie the pi-rat's picture

but,...but,...

how can this BE?

  • ...hasn't china got inflation licked now (nice job in ~~a few weeks!)? 
  • ...aren't  they ready-set to drive the next wunnerful, wunnerful phase of the global econom recovery and boom?
  • ...and have their currency become part of the new international reserve

have the msm polyannas been lying to us?  again?

Mon, 09/19/2011 - 12:39 | 1685084 Biggvs
Biggvs's picture

Compliments, Hugh. Keep kicking ass.

Mon, 09/19/2011 - 12:52 | 1685149 tkinfo
tkinfo's picture

There are actually a few of us hedge fund managers that are doing quite well in this environment. I run a private hedge fund in San Francisco that has been long Gold and short the major international banks and brokers since late 2007. Basically Hugh and I and a few others that will go nameless have what is best described as the Armageddon Trade in place and it works quite well when you believe we are in a global asset deflationary environment. Since the end of June we're up about 35% as well, but our returns from the start of the trades which include gold being up almost 3 times our entry point and the banks down on average 75%, leveraged 3.5 to 1, are fairly good as well.

The banking system internationally is broke with nonperforming loans swamping out any sort of reserves leaving them with a value of Zero and gold has a fair market value considerably higher then present levels.

Mon, 09/19/2011 - 15:09 | 1685678 falun bong
falun bong's picture

Let me know if you are taking client commitments.

Mon, 09/19/2011 - 20:36 | 1686850 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Good for you!

Mon, 09/19/2011 - 12:54 | 1685153 che
che's picture

conspicuously missing: his returns since inception.

Mon, 09/19/2011 - 13:15 | 1685239 pamriallc
pamriallc's picture

Time to swap your Ecclectica shares for Parson Advantage.

Mon, 09/19/2011 - 13:27 | 1685280 che
che's picture

i mean every time there's an article about hendry, he's like the guy that made 40% in october 2008. the bloody guy started eclectica in 2006, and since then he's up 32% with more vol than eur-chf on snb intervention night!

Mon, 09/19/2011 - 14:31 | 1685529 irishlink
irishlink's picture

Well done Hugh! Always loved watching you bamboozle the guys on CNBC . In 2006 I had a glimpse of what could happen in China when I read a report that compared pre depression USA and the expansion of credit  with what was and is happening in China today. Just multiply the affects and its sends a shiver down ones spine. Hendry has seen this coming for a long time and Central planning wont be able to control it.

Mon, 09/19/2011 - 20:34 | 1686841 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

Thanks T. D.!  I thorougly enjoyed the panel discussion.  Lot of egos floating around there but Mr. Hendry is a treat and with perhaps brilliance even to your level.  Like yourself and Mr. Hendy I see possibility of a deflationary spiral with this huge derivatives overhang.  Paper "and" commodity assets would be crushed at least in nominal terms in the near term.  Hard to believe that bonds and the FRN may be good investments at least in the short run.  Few people are "ego free" and can open their minds to all such possibilitiesl

I am Tuco Benedicto Pacifico Juan Maria Ramirez (aka the rat)

Tue, 09/20/2011 - 10:18 | 1688572 Norway
Norway's picture

Hendry has always been the smartest guy in the room.

Tue, 09/20/2011 - 10:18 | 1688574 Norway
Norway's picture

Hendry has always been the smartest guy in the room.

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