Hugh Hendry is a hedge fund manager who runs Eclectica Asset Management. He is Scottish and comes from working class parents. He is a little rough around the edges and definitely stands out among his more genteel competitors. He has a sharp tongue and is known for being highly critical when others try to take stands contrary to his own positions. But more often than not he has been proven right.
Hendry’s Principles for Investing
Hendry has granted fewer and fewer interviews in recent years. Part of this stems from the fact that his investors would rather he keep his contrarian views to himself and Eclectica so that they can make more money and stay out of the prying eyes of the media. But in a rare interview with Barrons, Hendry talked a little about the investor that he holds in the highest esteem and his principles for investing:
Barron’s:What makes a great macro fund manager?
Hendry: First and foremost, an ability to establish a contentious premise outside the existing belief system, and have it go on and be adopted by the rest of the financial community. My great hero is [Caxton Associates' founder] Bruce Kovner, who was able to imagine the dollar falling to 100 yen—when the rate was 200. I am an existentialist. To my mind, the three most important principles when it comes to investing are Albert Camus’ principles of ethics: God is dead, life is absurd and there are no rules. Of course, that’s a doctrine of promoting the individual. You own your own decisions. As CIO of Eclectica, with $700 million [under management], I have no engagement with the sell side.
A Few Salient Quotes from Hugh Hendry
“My CEO has banned me from media.” In response to why his media appearances were becoming more infrequent. I guess he has a habit of scaring investors and upsetting journalists and their other guests.
“I would recommend you panic. The European banking system is in a crisis.” Not much to say here. If not for massive injections of liquidity from the ECB things would have imploded long ago.
“Let’s purge this system of its rottenness. Let’s take on a recession. It’s going to be tough, people are gonna lose their jobs. They are going to lose their jobs anyway. We can spread this over 20 years, or we can get rid of it over 3 years.” Hendry is probably right, but will this happen? The answer is probably no. It is a matter of game theory and self interest of all parties involved to keep the shell game going as long as possible. So expect the malaise to last a long time.
“I want to short people like me.” In this video, Hendry lets the self-loathing come out. Well, not really. But he makes a point that we can’t all be hedge fund managers.
All in all Hendry is quite the character, but his returns speak for themselves. He really seems to shine when all hell breaks loose. And you can bet that he will make money when everyone else is losing theirs.