The total withdrawn from Odey Asset Management’s fund range after a Financial Times exposé into the behaviour of hedge fund boss Crispin Odey is at least £277 million, Morningstar data exclusively shows.
Crispin Odey denies all the allegations of wrongdoing contained in a wide-ranging and damning Financial Times investigation published last Thursday, but has nevertheless stepped away from the business while inquiries take place.
Since Thursday 8 June, when the FT‘s story broke, investors have been quick to withdraw their money from Odey’s funds. The total withdrawn so far is at least £277 million.
LF Brook Continental European has had the largest outflow as of June 15, with outflows hitting £83 million. The fund is still open, though it remains to be seen for how long.
That is followed by Brook European Focus, another fund that remains open. As of Tuesday this week, it had witnessed £49 million in withdrawals. The third biggest outflow belonged to Odey Swan with £33 million, also as of Tuesday, when that fund closed completely.
This story is a fast-moving one. Morningstar has covered some of the main developments, including coverage running coverage of which funds are still open. Four funds are so far gated, so investors cannot buy and sell.
Morningstar’s calculations are in GBP, but it is worth noting many of Odey’s strategies are either Euro or Dollar funds.
While the numbers appear to be significant, the asset manager had an estimated £4 billion under management as of last year. LF Brook Continental European, which has the largest outflows, has £164 million under management as of today.
As of today, the largest fund, LF Brook Absolute Return, has £462 million in assets. Through Thursday the fund had seen outflows of only £6 million since the story broke.
Under European rules, funds typically report their full portfolios twice a year via annual and half-year reports. Holdings are also published in factsheets, typically as a Top 10 by size.
But further to that, Morningstar’s operations have comprehensive data on portfolios gathered from fund groups. They usually provide data on a month-by-month basis.
Regardless, displaying full portfolios can differ in frequency and timeliness; some fund groups opt for releasing their complete holdings with a three-month lag. Odey Asset Management may be one of these companies.
FCA in Spotlight
When Crispin Odey resigned over the allegations, which he strenuously denies, Morningstar asked whether regulation is fit for purpose.
The senior managers and certification (SMCR) regime was introduced to impose tougher standards of conduct. These rules demand, among other things, that staff in a “controlled function” (including senior managers) act with integrity. Where breaches of the rules are identified, the FCA can ultimately remove permissions from individuals directly.
My colleague Ollie Smith writes: “On paper, this might sound like a good system. But the Odey case might show the FCA’s own hand is weakened by legal factors beyond its control in the courts.”
MPs on the Treasury Select Committee are now set to grill the regulator over its handling of the allegation of sexual misconduct in the Odey case, as we wrote earlier this week.
In a letter to FCA chief executive Nikhil Rathi, the Treasury Committee asked the regulator to precisely outline the “nature and intensity” of its engagement and monitoring of Odey’s firm over the past five years.
The watchdog was reportedly given a report of Odey’s conduct in early 2021 after the firm took disciplinary action against him. The committee has also asked the watchdog to confirm whether or not this information was received, and if so, what action it took in response.
Morningstar Methodology
Based on the publicly available information, we’ve looked at the 14 funds in the Morningstar database. We’ve narrowed our focus down to UCITS funds and excluded funds such as Odey European Inc and OEI Mac, which are domiciled in the Cayman Islands.
We have used Morningstar Direct to look at the daily estimated net flow at fund level, an aggregate figure of the multiple share classes within each fund. For the grand total, we have added together the daily net flows from June 8-15.
Odey Asset Management declined to comment.
Additional reporting by Valerio Baselli.
