Crispin Odey’s hedge fund gains surge by 193pc

Crispin Odey has made returns of almost 200pc so far this year as market turmoil and a slump in the pound boosted gains at his hedge fund.

The Tory donor, who was a vocal backer of the Brexit campaign, last week declared that government bonds were “the gift that keeps on giving” after prices plunged.

He has previously bet that the pound would slide against the dollar, while also shorting gilts.

His fund’s gains this year now stand at 193pc, a source told Bloomberg on Tuesday.

It follows turmoil on the markets as investors reacted with dismay to the Chancellor’s mini-Budget last month.

However, it was claimed last night that Mr Odey - contrary to expectations - had reversed his short positions and was long on the pound and UK government gilts when Mr Kwarteng made his statement on September 23.

He subsequently made a "packet" out of the recovery  of sterling, which was trading at $1.14 on Tuesday, according to ITV's Robert Peston.

"I asked him why and he said 'Patriotic!'," Mr Peston tweeted.

"He [Mr Odey] tells me he reversed his short position after 'Kwasi came along', which is the opposite of what the market believed."

It comes as Mr Kwarteng is separately facing questions about a private lunch he had with Mr Odey, who used to employ him when he worked at Odey Asset Management, in July.

The two discussed political “gossip”, Mr Odey has said, and their meeting took place before Liz Truss had won the Conservative leadership race or Mr Kwarteng’s appointment as Chancellor.

After delivering his mini-Budget, Mr Kwarteng is also said to have attended a champagne reception with City hedge fund managers who “egged him on” to press ahead with more tax cuts.

Labour MPs on Tuesday night demanded that the meetings be investigated by a Parliamentary committee.

Mr Odey has dismissed any suggestion of collusion as “rubbish” conspiracy theories.

He previously told The Telegraph his short positions had been in place for months and that on the day of the mini-Budget he was busy shooting.

“I haven't put a trade on for the last two months. I didn’t need to,” he added.

“This was easy to see from miles away and didn't depend on Kwasi coming into government or anything else.”

He previously said he believed sterling has further to fall and could eventually become worth less than the dollar because the Bank of England is failing to tackle inflation effectively.

Mr Odey’s bets on sterling and UK government bonds are thought to have delivered his fund’s strongest performance ever this year.

His previous best was almost three decades ago, when the fund returned 60pc in 1993.

The fund’s short exposure to UK government debt mainly concerns bonds maturing in 2050 and 2061, according to Bloomberg.

Mr Kwarteng’s plans for unfunded tax cuts triggered a mass sell-off of the bonds and forced the Bank of England to intervene to calm markets when it became clear that the stability of pension funds was under threat.

Mr Odey’s bets against the pound have triggered outrage in some corners, owing to his support for Brexit during the 2016 referendum.

Some have claimed the position amounts to a cynical attempt to profit from the UK’s economic difficulties.

But by contrast Mr Odey has blamed the recent bonds rout on Remain-supporting investors in the City.

“Amongst lots of friends of mine who are Remainers, they just decided that they hate this Government,” he told the Telegraph last week.

“Obviously Kwasi they hate now as well, and they think Liz Truss is useless. They can't stand poor Jacob Rees-Mogg.”

His flagship Odey European Inc hedge fund strategy had about $965m (£843m) at the end of August, according to an investor document reported by Bloomberg.

Prior to the mini-Budget on September 23, Mr Odey’s flagship fund had already swelled in value by 140pc in the year to Sept 14.

On Tuesday backbench Labour MPs, led by Dame Angela Eagle, called on Treasury Committee chairman Mel Stride to investigate possible “insider trading” by hedge fund managers.

In a letter, they raised concerns about the lunch Mr Odey had with Mr Kwarteng and the champagne reception last month.

“Any suggestion or suspicion of private individuals using privileged access to profiteer from our country's economic difficulties must be fully investigated,” they said.

“Our constituents are already deeply angry that financial traders are enriching their personal wealth by betting against Britain.

“Any political assistance received in that process would be unacceptable.”