Some hedge funds clean up after Brexit vote

In the hours after Britain’s surprise vote to leave the European Union, chatter on Wall Street and beyond shifted to who made or lost fortunes on the outcome.

Two of the early beneficiaries were London hedge fund chieftains who took different views on the vote, but both wound up making money.

David Harding, the billionaire founder of Winton Capital Management, donated millions to a group that hoped to persuade Britons to vote to remain in the EU. He lost that battle, but his Winton Diversified fund positioned itself to be an early winner nonetheless.

The fund gained 3.1% early Friday, helped by bets against the British pound and euro, according to a client note reviewed by The Wall Street Journal. Winton oversees more than $ 34 billion and uses automated computer programs to trade around economic trends. A spokeswoman for Winton declined to comment.

Crispin Odey, meanwhile, signed a public letter backing the campaign to leave the EU and set up his $ 10 billion firm accordingly. Odey’s flagship hedge fund gained 15% on Friday, paring half its loss for the year, a person close to the matter said, helped by wagers on havens like gold as investors sought stability.

“What a day,” Odey said.

Gold for June delivery climbed 4.7%, to $ 1,320 a troy ounce, on the Comex division of the New York Mercantile Exchange, its largest one-day gain since September 2013.

European stocks closed with big losses, in some instances their steepest since 2008, while stocks in Asia and the US also fell sharply, with the Dow Jones Industrial Average sinking 610 points, or 3.4%. The pound dropped in intraday trading to its lowest level against the dollar since 1985, though it later recovered some of its decline.

Part of the reason global markets reeled from the “Brexit” vote: Many assets, particularly stocks, had been priced comparatively expensive to years past and left little room for error. Those high valuations for assets are why some investors, such as billionaire trader Stanley Druckenmiller, had adopted bets on a market pullback in recent months. Druckenmiller declined to comment.

Most hedge funds don’t provide investors daily or even weekly performance information. It may take weeks for the losers and winners to surface.

What is certain is that in the hedge-fund hot spots of New York, Greenwich, Connecticut, and London’s Mayfair district, Britain’s decision was treated as a must-see event. Late on Thursday, trading floors normally deserted after US and London markets close were buzzing overnight, with televisions switched to live broadcasts of vote counts from districts across the UK Some employees pulled all-nighters.

Melissa Ko, a currencies trader who invests millions of dollars for her family, was in her New York office until 3am watching the vote returns roll in. The former hedge-fund manager said she had a position to short, or bet against, sterling that she ended at around $ 1.37, and then turned her attention to another target to short: the euro.

“The market was very offsides in terms of the probability they were pricing in for this outcome,” she said. Still, she said comparisons to the collapse of Lehman Brothers and other crises of years past were off base. “I’m not expecting more fireworks,” she said. Late in New York, the British pound ended down 8.1%, to $ 1.3676.

At around the time Ko was heading home, Alexander Roepers was waking up. The 57-year old founder of Atlantic Investment Management, a more-than $ 1 billion hedge-fund firm, determined the worst was over. He stopped shorting the pound after $ 1.36 and covered his positions that had bet on declines for hard-hit UK companies like Marks & Spencer Group and Dixons Carphone, down 11% and 13%, respectively.

“This is neither Independence Day [nor] dissolution day,” he said. In fact, by midmorning in New York he was adding new bets on European stocks rising and said he expected to see much of the losses recovered in one to four trading days.

Some profited even without a strong view on Britain’s vote. Activist hedge fund SpringOwl Asset Management bet against the pound Thursday to offset risks from its investments in firms like online-gambling operator GVC Holdings, founder Jason Ader said. Enter ‘Brexit,’ and the $ 300 million firm wound up gaining 2% Friday to take its year-to-date return to 22%, he said.

Hedge funds who use automated programs to trade were some of the early winners, as they have been in volatile stretches of years past. AQR Capital Management’s Systematic Macro fund gained about 5%, said a person familiar with the fund’s performance. Aspect Capital rose around 3%, according to a person familiar with the firm.

It is unclear how one of the most famed investors fared.

George Soros earned fame with a wager against the British currency in 1992, a trade that led to $ 1 billion in profits. Earlier this year, he returned to trading after a long hiatus, placing big, bearish bets as he worried about the outlook for China and other parts of the global economy.

Soros Fund Management, which manages $ 30 billion for Soros and his family, sold stocks and bought gold and shares of gold miners, such as Barrick Gold Corporation, anticipating weakness in various markets.

Barrick Gold rose 5.8% on Friday. Soros declined to comment through a spokesman.

Write to Rob Copeland at, Gregory Zuckerman at and Laurence Fletcher at

This article first published in The Wall Street Journal

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