Hedge funds have “assumed a remarkable significance” in the Brexit referendum, which David Cameron has described as “the most important decision the British people will have to take at the ballot box in our lifetimes”, say Harriet Agnew and George Parker in the Financial Times.
In the 1975 vote, big companies bankrolled the Yes campaign on British membership. This time, most are reluctant to enter the fray. “They would require shareholder approval to make donations and some fear a backlash from eurosceptic customers”, especially since the drubbing the CBI’s leadership has taken over its alleged bias. That has made hedge-fund managers “a prime target for fundraisers on both sides of the argument”.
Many hedge-funders are backing Brexit as they have “clear professional reasons” why they want the UK to leave the EU, said David Hellier in The Guardian – notably “a dislike for what they regard as over burdensome – and profit-reducing – regulation”. Other financiers are driven by their hearts and guts.
“People have forgotten why [the EU] exists,” says Guy Hands of Terra Firma: that is, “to bring peace to a part of the world that has been at war for centuries… If there is a breakdown of the European Union, it will lead to wars as night follows day.” Here we profile four of the main players on either side of the argument.
In: John Armitage, Egerton Capital
The founder of the $15bn hedge fund Egerton Capital has made “a six-figure” donation to the In campaign. Armitage presides over “one of the world’s most successful hedge funds”, says City AM. In 2013, assets under management surged by 80% “due to massive demand from investors” and Egerton shut the door on its flagship long-only fund, having already closed its long/short fund.
You can see why Armitage’s investors are so enamoured, said Insider Monkey. His focus on European equities has helped Egerton Capital return more than 15% annually since its 1994 inception. A history graduate from Pembroke College, Cambridge, Armitage cut his teeth at Morgan Grenfell Asset Management before striking out on his own. He rarely gives interviews. A friend told the FT: “He is fighting against Little Englanders on the Out campaign. Who is going to be negotiating trade deals with the US if we’re outside Europe?”
Out: Sir Michael Hintze, CQS
The British-Australian boss of hedge fund CQS looks set to make “a generous donation to the EU Out campaign”, says the FT. Euroscepticism is a family affair: his son John is a researcher for Vote Leave. Worth around £1.2bn, Hintze was born in China but left for Australia when he was a child, later studying physics and engineering at Sydney University. After being head of equity trading at Goldman Sachs in London, he founded CQS in 1999 and now has around $14bn under management.
A generous benefactor of Sydney and Oxford universities, Hintze also stumps up for his favoured political causes, says The Guardian: he has given £3.2m to the Conservative party. But he knows a bit about Europe too, says Financial Review. He is digging around “the corners of Europe’s banking system”, buying up the loans of over burdened banks. “If we really want to get the value, we have to go away from the crowd.”
In: David Harding, Winton Capital
Harding, the billionaire founder of Winton Capital and a Conservative Party donor, has “bucked the trend of investment managers promoting eurosceptic causes”, says the FT. He’s just been made co-treasurer of the Britain Stronger in Europe campaign, to which he has made an “undisclosed donation”. A physicist by training – and a “large donor” to his alma mater Cambridge University – Harding runs over $30bn at Winton and “has a lot of investors in Europe”.
He reckons that some hedge-fund managers have “cried wolf a bit” about the impact of EU regulation and that “the numbers just don’t stack up on the alternatives” to staying in Europe. “I have seen first-hand from decades working with a range of different businesses how EU membership helps create jobs and keep down prices… I think the EU’s successes have been taken for granted and it has been blamed for things in Britain, sometimes unfairly.”
Out: Crispin Odey, Odey Asset Management The founder of Odey Asset
Management is a “vocal supporter” of the Vote Leave campaign, says the FT. Educated at Christ Church, Oxford, Odey qualified as a barrister before running continental European pension funds at Barings and Framlington. He founded Odey Asset Management in 1991. Odey hit the headlines in 2008 when he paid himself £28m after successfully anticipating the credit crunch. In January, he predicted a bloodbath for shares, claiming we’ve entered an economic downturn “likely to be remembered in a hundred years”. He subsequently made more than £200m from the fall in Chinese stockmarkets.
Odey’s beef with the EU isn’t about regulation, says The Guardian. “There’s nothing scary for hedge funds per se from Brussels,” he says. He just doesn’t think Britain should be part of the club. “Europe hasn’t exactly covered itself in glory.”