Hugh Hendry Fund Soars 40% YTD As China Sinks

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