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How Crispin Odey funded Brexit and then bet on the UK's economic downfall

Shoppers are seen at the Debenham shop taking advantage of the Black Friday deals that many high street stores are offering. Photo by Dinendra Haria/SOPA Images/LightRocket via Getty Images

Brexit supporter Crispin Odey continues to profit from Brexit as he bets against the UK economy.

The Hedge fund manager supported Brexit with various financial contributions and political interventions. He donated to £873,323 ($1,111,465) to UKIP and other campaigns in favour of leaving the European Union. In June 2018 he suggested that Brexiteer Michael Gove should replace Theresa May as UK prime minister.

Despite, or perhaps because, he got the referendum results he had favoured, he has amassed varied bets against the UK economy.

Odey Asset Management has bet against many retail-facing stocks. The fund has a short position  meaning it expects the value of the company to go down  in Intu, which owns shopping malls across the country. He is also a long-term short-seller of troubled UK retailer Debenhams. Other short positions include homebuilder Berkeley Homes, and broadcaster ITV, which depends on advertising revenue for much of its income.

The high street has been one of the casualties of Brexit, as consumer uncertainty and other factors have seen retailers struggle to keep their head above water. Low wage growth in the UK, as well as inflation from the devaluation of the pound against the euro, means the cost of living has hit providers of non-essential goods.

He is not just betting against UK economic trouble by selling stocks short. He is also short UK government bonds, meaning he expects the government to lose credibility over its ability to repay its obligations, or that interest rates will continue to rise. Odey also holds positions in several gold mining companies including Kinross Gold, suggesting he sees further political and economic strife across the globe.

However, his Odey European Fund is up 50% for the year, including an approximate 7% gain in November, and could finish 2018 as the best performing hedge fund. After the referendum he was reported to have made $300m at his fund, and told the BBC of his success: “There’s that Italian expression, Al mattino ha l’oro in bocca’ — the morning has gold in its mouth.”

Odey’s funds had fallen out of favour with some investors as his performance suffered and assets under management fell from $11.7bn in 2015 to $6bn in August 2017. As stock prices rose in the US and much of the FTSE, his losses worsened when he took a pessimistic stance on the world economy. The fall in his assets was matched by a drop in his 2016 net worth of £900m to £750m in May 2018 standings, according to the Sunday Times Rich List.

However, the FTSE and US share sell-off, coupled with uncertainty over Brexit and slowing economic growth, has delivered strong returns for Odey.