£110 million in one trade!

A sensible prediction on a seemingly obvious outcome on how the markets would react following the British referendum on European Union membership by 36-year-old hedge fund manager James Hanbury has resulted in a vast win of £110 million ($148 million), the Daily Mail reports.

The paper says that despite commissioning a private poll before the referendum which showed a Remain vote winning, Hanbury, who manages £1.1 billion for Odey Asset Management, decided to gamble on a Leave vote anyway — reasoning that there was a lot to gain and little to lose.

The vote to leave, a so-called Brexit, raised the prospect of sustained anxiety in the global economy as investors struggle to surmise what is happening. He guessed that Britain might shock the world by voting to Leave — and that the value of sterling would plunge as a result.

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Brexit hit the financial world hard, with the pound dropping to a 31 year low and billions disappearing from the FTSE after the result. His latest coup will go down in hedge fund history and is comparable to a similar move by legendary investor George Soros ahead of Black Wednesday (16 September 1992).

Soros is widely known as the man who “broke” the Bank of England in 1992, when he bet against the pound and made a reported £1.5 billion. He short-sold more than £7.6 billion in the currency — meaning he would make money if its value fell. So when the UK crashed out of the European Exchange Rate Mechanism and the pound collapsed, Soros pocketed a windfall.

18 Thoughts

  1. A windfall with lady luck smiling hard…I guess for James and Soros..pound wagering over an uncertain outcome did augur well for these gentlemen especially with the stakes so high!!!

    Liked by 1 person

    1. Very true Sunita ji. Sometime people bet heavily on their gut feelings and they win! Higher the stakes, higher the gain. They are speculators. Many people consider George Soros to be an investor, but he prefers the term speculator. In fact, he has said that “an investment is a speculation that has gone wrong.”

      Liked by 1 person

    1. Yes Somali. They are in fact speculators. Many people consider George Soros to be an investor, but he prefers the term speculator. In fact, he has said that “an investment is a speculation that has gone wrong.” John Keynes defined speculation as “the activity of forecasting the psychology of the market”, and speculative motive as “the object of securing profit from knowing better than the market with the future will bring.”

      Liked by 1 person

      1. True. Windfall gains can only arise out of speculation because one cannot beat the market consistently. But then these people have successfully zeroed in on such speculations that have a huge upside and limited downside. In this case too if Britain chose to stay on still the currency would not really have strengthened much more than it already was….but then how many people thought that exit could be a possiblity too.

        Liked by 2 people

        1. Yes true. Need to remember the adage “Know when to hold ‘em and know when to fold ‘em”, otherwise you may lose everything.
          Last exit polls were in favour of Remain. Sterling also was returning to its normal level and so market had priced in for Remain to a large extent.

          Liked by 2 people

            1. Market reacts sharply to shocks. The Pound plummeted to 1.32 against the greenback late Thursday, following the shocking referendum’s result, and once market seemed to have digested it, Carney offered a surprise speech, suggesting the BOE is preparing another round of easing for this summer. He hinted that August will likely be the time to cut, but that they could also act as soon as next July 14th. The pair recovered some ground and holding around the 1.33 figure.
              Any further movement will depend upon the political developments and the negotiations between the UK and the EU.

              Liked by 1 person

  2. Of course, most of the market called the result wrong, and hence the FTSE adjustment the day after the result – it’s now higher than pre-Brexit, interestingly. How did Odey realise the gain, by the way, as it was primarily a move against the U.S. dollar?

    Liked by 1 person

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