Brexit hit the financial markets hard, with the pound slumping to its lowest level since the 1980s. Much of the shock in the markets came from the unexpected nature of the results, as Brexit was never ‘priced in’ to the markets. However, as always with big market movements, some people correctly predicted the trend and made huge sums of money. In this post, we focus in on one person in particular: Crispin Odey.
The Story of Crispin Odey
Crispin Odey is a hedge fund boss living and working in London, and he is one of a handful of people who made a huge sum of money from Brexit. A supporter of the ‘Out’ campaign, Crispin took a number of short positions on both company stocks and in the fx market, believing that the UK would vote to leave the EU, believing that their value would fall in the aftermath of the vote. When the result was announced, Crispin made just over £220m for himself and his investors, declaring “I think I may be the winner”. Few would argue with that analysis.
How Did he Do it?
In the run up to the vote, Mr Odey invested heavily in gold, which is known as a safe haven asset that holds its value in troubled times. He also bet large sums in the pound falling against the dollar.
The premise of his bet was that, when Britain voted to leave the EU, investors would flock to buy gold, sending the price soaring to a much higher level than he bought it at. Likewise, with stock, people would flee the market, causing prices to crash. Of course, in taking this position, he took a huge gamble. He himself admits that, had the UK voted to remain, he would have lost huge sums of money.
He mainly bet against housebuilder Berkeley Group, assuming that house building activity would fall in the aftermath of Brexit. He was proved correct, too, as the value of the group fell by more than a fifth the day after Brexit.
Overall, he hedged funds around £1.5 billion in the markets just before the Brexit vote and estimates that they gained 15 per cent in value – a total of £220 million.
All of his information came via a private poll that he commissioned in order to steal an advance on the financial markets. Not bad for a few hours of work, eh?
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