“Get The Popcorn Ready” – Why The World’s Most Bearish Hedge Fund Thinks The Biggest Crash Is Almost Here
by Tyler Durden
ZeroHedge.com
Fri, 05/10/2019
Conventional investing wisdom would have you believe that anybody who has remained bearish on global markets since the financial crisis has not only lost a boatload of money, but has missed out on the opportunity to cash in on one of the most torrid bull markets in recent memory.
However, as Horseman Global’s Russell Clark has proven over and over again, this simply isn’t true. A few years back, we anointed Horseman with the title “The world’s most bearish hedge fund” for a very simple reason: Of all existing asset managers, Horseman may be the one with the biggest and longest net short position in history. Just look at the chart below, which shows that Clark’s net exposure was (as of March) was a staggering -88.14%, with a gross short position of 160%.
Yet, to assume that Clark has lost his shirt over the past ten years would be a mistake. Actually, his fund outperformed the S&P 500 for the period between 2011 – when he first went net short – to the end of 2018 (when the Q4 meltdown helped his fund post double-digit returns well above its benchmark).
In 2014, Clark posted double-digit returns when oil prices cratered (he was short). In 2013, he made money shorting Brazilian equities. He started with just $111 million when he took over the fund in January 2011, but AUM peaked at $1.5 billion in 2015.
However, the fund’s inconsistent performance (it’s not unusual for Horseman to be up or down 5% in a single month) has alienated some investors who are uncomfortable with the volatility, even as Horseman has bested most other hedge funds in terms of performance, as one former investor told Bloomberg.
Tim Ng, chief investment officer of Princeton, N.J.-based Clearbrook Global Advisors LLC, says his fund pulled its money for similar reasons. “The stretches of negative performance and the high volatility of monthly returns became a consistent drag on our portfolio’s overall return, which prompted us to redeem,” he says.
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