According to the US Commodity Futures Trading Commission, global hedge funds have raised their short positions on the pound to $7.8bn in currency futures.
This has politicians, media personalities and many of the general public turning to Twitter to air their disgust, believing hedge funds are profiting from the political pandemonium.
The common opinion is that the “Vote Leave” campaign was fuelled by donations from high profile hedge fund managers.
An anonymous hedge fund manager claimed; “There were big money sponsors from the community, but that’s a handful of high-profile people versus tens of thousands that are less politically motivated and who prefer a degree of uncertainty.”
Guy Verhofstadt – European Parliament’s Brexit Co-ordinator wrote in The Guardian back in July; “The few who may prosper are the wealthy bankers and hedge fund managers who have already bet on chaos.”
Many are citing the fact that lower taxes and a less regulated economy could be the motivating factors behind hedge fund donations. It has also been predicted that the UK will become the “tax haven” of Europe.
Fnlondon.com interviewed 40 hedge funds and found that the majority do not support brexit.
Oliver Fochler – Chief Executive of Stone Mountain Capital; “Unless you shorted the pound a few years ago and took a specific view and successfully implemented the trade, brexit didn’t make hedge funds money. And many of these trades got delayed or ended up not happening.”
He continued to say that things are already more difficult. When doing a new client agreement in January the client asked for financial agreements (usually written in UK law or New York State law) to be written in Luxembourg lax due to legal uncertainty over brexit.
Bloomberg have claimed that Crispin Odey, perhaps the individual under the brightest spotlight made an estimated £220m after the 2016 referendum. However, Crispin claimed; “I haven’t been interested in sterling for a while, I turned round on sterling in February.”
Two anonymous hedge funders had the following to say;
“Not many hedge fund managers are taking big positions in sterling, they don’t feel they have an edge where it’s going to be” “More people who work in hedge funds would like to stay in the European Union than leave”
Stuart MacDonald – Managing Partner at Bride Valley Partners; “Who apart from those that shorted sterling, has made a killing out of brexit? If that’s the case, why aren’t most macro or currency funds going through the roof?”
MacDonald went on to highlight the fact that British hedge funds will lose their “passport” that gives them the right to smoothly sell to clients in the single market.
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