European hedge fund stars profit in buoyant January

Fri Feb 3, 2012 8:56am EST

* Funds benefit from banks rally after ECB loans

* Crispin Odey's hedge fund up 14 pct this year

* Lansdowne, GLG, CQS among other gainers

* Average hedge fund up 1.72 pct in Jan - HFRX

By Laurence Fletcher

LONDON, Feb 3 (Reuters) - Star European hedge fund managers including Crispin Odey and Pierre Lagrange were among the top performers in an upbeat January for the industry, as the European Central Bank's cash boost for battered banks fuelled a stock market rally.

Shrugging off a disappointing 2011, in which the average hedge fund lost around 5 percent according to HFRI, managers profited from gains in most assets as investors bet a solution could be found for the euro zone's deepening debt crisis.

"All markets were up in January, it was just a very good month all the way around," said Lisa Corvese, managing director for global business strategy at hedge fund software group PerTrac, which looks closely at hedge fund performance.

"It doesn't matter what market you were in, you're up right now. It's a rising tide."

The average hedge fund gained 1.72 percent in January, according to Hedge Fund Research's HFRX index, which measures global hedge fund performance, with equity funds among the best performers, gaining 2.07 percent.

In comparison, the euro zone's blue-chip Euro STOXX 50 gained 4.3 percent and Britain's FTSE 100 rose 2 percent.

Funds were helped by a 10 percent rise in the European banking sector, after the European Central Bank provided banks with 489 billion euros ($644 billion) of ultra-cheap, long-term cash, with more expected at the end of this month.

Among the most high-profile winners was London-based Crispin Odey, whose Odey European fund is up 14 percent so far this year, with particularly strong performance coming in the past few days.

The fund, which fell 20 percent last year, has benefited from its bullish positioning on sectors such as banks and media and individual stocks such as Pendragon and Sports Direct.

"Our stock selection has been good. It wasn't a stockpicker's year last year but we held our nerve," Odey CEO David Stewart told Reuters.

"The deep value stuff we've always liked ... is doing well," he added. "We think stocks are cheaper than other assets."

Lansdowne Partners, which manages around $16 billion as at last year and which has been bullish on banks such as Lloyds , saw its flagship UK fund return 5.7 percent in January.

The fund, run by Stuart Roden and Peter Davies, made millions shorting banks during the financial crisis but lost around 20 percent in 2011.

Pierre Lagrange, the long-haired Belgian who navigated 2011's choppy markets to return 7.2 percent over the year, made 4.7 percent in GLG's European long-short hedge fund in January, according to a source familiar with the matter.

GLG, part of Man Group, the world's biggest listed hedge fund manager, also saw gains of 4.2 percent in John White's Alpha Select fund and 3.9 percent in its Emerging Markets fund.

And CQS's Australian founder Michael Hintze returned around 9 percent in his multi-strategy Directional Opportunities fund for the month to January 27, said a source familiar with the situation. CQS declined to comment.

Elsewhere, CapeView Capital, which was launched by Theo Phanos and which focuses on credit and equity opportunities, saw its flagship European credit fund rise close to 3 percent to January 27, said an investor who had seen the figures.

However, some hedge funds were hurt by their defensive positioning in rising markets.

Marshall Wace's $450 million Global Opportunities fund, an equity long-short fund with an emerging markets bias, fell 4.19 percent during the month.

The portfolio, managed by Fehim Sever, gained 27.5 percent last year as one of 2011's strongest performers.