Hugh Hendry of Eclectica Asset Management

http://en.wikipedia.org/wiki/Hugh_Hendry

2009.01.23 - FT interview
http://www.youtube.com/watch?v=owH4vyyCeSA
- he draws an analogy to England's trying to return to a gold standard in the 1920s. I should learn more about that.

2009.03? - Citywire interview
http://www.youtube.com/watch?v=sJNiMFFR ... r_embedded
- he stresses that it's never been the case that stock markets have gone up 30x in a 30-year period. he describes this as "unprecedented prosperity"; it seems that phrase can either mean that the rise in prices was legitimate prosperity for the united states, or that it was legitimate prosperity for fund managers.
- you only want to be contrarian 20% of the time
- his ideas are somewhat in line with jim rogers': he's betting on agriculture, and thinks that finance isn't going to do well in the near future (next 20 years?). but on other things he seems to hold the opposite opinions from jim rogers: hendry thinks we're in a deflationary environment, while jim rogers talks a lot about the government printing money and causing inflation. and jim rogers is very bullish on china, while hendry talks a lot about how bad things are in china. I could be oversimplifying their respective views, though, b/c they may have both short- and long-term views for each topic (the US dollar, China), and they may actually agree for the most part but just stress different time-frames.

2010.02 - Russia Forum w/ Taleb
http://www.youtube.com/watch?v=YQ2otZqmNKE
- 03:50 he refers to Keynes' The Economic Consequences of the Peace
- 06:20 he says "I don't read any research", referring to broker's research.
- 07:00 he describes a particular trade he's put on that sounds strange. He's "underwriting the risk that the Bank of England will cut rates further" He uses the money he gets underwriting that risk "to cheapen an option saying I don't think the central bank is going to raise rates over the next four months", and if he's right he makes 5 times his money. If he's wrong he loses his option premium, which he says isn't much. I'm wondering why he doesn't use leverage to maximize what he makes from that.
- 08:10 - he alludes to a CDS trade and hypes it up a lot, but it's kind of obvious that CDS is a broken security.

2010.03.09 BBC Newsnight interview
http://www.youtube.com/watch?v=3FPcx4beW8g
- 01:31-01:43 - Hugh says he has $400 million under management, including his own money
- 02:00 - the trader has a copy of the economist on his desk
- 03:03-03:27 - the reporter asks if buying CDS to speculate on the failure of companies/countries is "just pure gambling", and it seems to me that Hugh dodges the question by saying that those critics are just upset at the vision of the future that Hugh has been advocating. I think the honest response would have been the following:

[me as Hugh:] Speculators can provide liquidity to socially-important markets with their 'gambling'; that is a good thing for the world and should be encouraged by the public and by government if it's being done in a sustainable way. The real issue here is whether CDS is a sustainable security in its current form. I don't think these banks are pricing CDS properly, which is why I'm purchasing some. They will learn their lesson once they lose enough money, and the world will benefit from the advance in their knowledge. That's how capitalism works. That's not pure gambling. The main reason the public is upset is that they have the feeling they will need to bail out the banks for the banks' stupid practices. What the public should be asking itself is how to avoid bailing out banks that make stupid decisions. I suggest that some type of special bankruptcy be created that will keep the bank operating normally and prevent the kinds of bank runs we saw in '08, but will punish employees, stockholders, and bondholders for any irresponsible behavior on the part of the bank. [Nathan: of course I could be wrong about some/all of what I've written here; this is my guess at the moment of what the truth is]

- 04:00 - Hendry's reading the Financial Times. He has a copy of the Jan/Feb 2010 Foreign Affairs on his desk ("The New Population Bomb")
- 04:00-04:05 - I can't make sense of what Hendry was saying to his employee, although I bet someone with more specialized knowledge might.
- 05:43-06:01 - He gets a text(?) message or email letting him know that he'd get 1.5-2million more in his long-only European fund, which he says "kind of doubles the size of the fund".
- 06:00 - books seen are Lords of Finance, Prophet of Innovation: Joseph Schumpeter and Creative Destruction, Tragedy and Hope: A History of the World in Our Time, Money, Bank Credit, and Economic Cycles by Jesús Huerta de Soto
- There's also a book beginning with "THE ECONO-" that I bet someone could recognize if they had the same book. The Huerta de Soto book next to it is 885 pages, so it seems that the "ECONO-" book is around 150-200 pages. According to wordhippo.com the only words that begin with "econo" are economic, economical, economically, economics, economize, economizing, and economy, which makes it doable to search for books beginning with each word; however, there remains the possibility that the book was using a new word or unusual word. I haven't been able to find a way to search systematically for books that begin with a particular phrase, but I'll list possibilities here: The Economist by Xenophon (~200pp)
- "I spend my time reading books."
- he has world-map posters on his walls; I think a similar map that visualizes the money-world could be a good product to sell to people (like the one by xkcd)

2010.05.05 RussiaToday interview
http://www.youtube.com/watch?v=F5XIF2P5nJ8
- the bailout of Greece is really a bailout of European banks holding Greek debt

2010.09.21 BBC Hardtalk interview
Part 1 - http://www.youtube.com/watch?v=zvzKgjaVnlE
Part 2 - http://www.youtube.com/watch?v=MJSO3H4GLqw
- Responding to a question about his negative view on things making him enemies: [My earliest report cards said] "'He's a great worrier.' And if you will, I've grown up and I've capitalized upon my propensity to worry about things, so I take risk, and then I'm full of foreboding and I'm full of fear that I've got things wrong, and that makes me a good and a conscious risk-taker."

2011 LSE AIC Conference
http://www.youtube.com/watch?v=RIb3wIePclo
http://vimeo.com/29879763
- he describes how he became a hedge fund manager
- he talks about how China was trying to create "sovereign wealth" (the ability for the authoritarian government to exert power on the world stage?) rather than focus on helping to cultivate profitable companies. They show a vid w/ Hendry pointing at empty skyscrapers in a city in China as an example of excess capacity being created to meet yearly GDP growth targets.
- Hendry talks about how to short China and gives a strange analogy w/ China as the Sun in a solar system, and something about getting too close to the Sun as being a dangerous thing. I didn't really understand it.
- Hendry thinks we might see a lot of inflation if there was a "restructuring event" (??) in China and/or the EU.
- he's got CDS protection on Japanese steel manufacturers which export to Korea and China; he's using this as a way of shorting China
- he thinks a catalyst might be the appreciation of the Yen or Dollar via the writing down of debts, because apparently the writing down of debts reduces the supply of money
- 42:54 - refers to a book about a hedge fund manager that blew up in '08
- 44:26 - he seems to admit to using a type of technical analysis:

[Context: Immediately before this quote he had described a situation in which one of his analysts recommended a pharmaceutical company based on its fundamentals, but it then issued a profit warning and the stock fell 40%.] In some respects, I go around and I don't wanna know [about the fundamentals of companies]; I don't wanna do stock research. I want to have that itch--that trepidation--that says, "I don't know the complete picture here." And therefore I watch things like a hawk, and if the chart breaks down I trade, I sell.

- 44:58 - "Procrastination kills you in a business which is determined by risk." (because you keep taking losses to your position while you dither about whether to change your mind)
- 45:35 - Q: What are the most overpriced and underpriced skills in the hedge fund community? Hendry's response seems to be that conventional intelligence is overpriced and general intellectual curiosity and flexibility is underpriced. He demonstrates this by talking about how "weird" things happen in the markets that would not be predicted by the smartest hedge fund managers.
- 51:20 - Q: How do you time the trades you make based on these macro views of yours? Hendry: You have to structure your bet carefully. I'm not good at short-term timing and so I don't play my views via shorting equities; I'm using CDS because my downside is limited.
- 52:30 - He says his Japanese CDS bet lasts 4 years longer (so...early 2015?) and he's committed 8% of his fund's assets to pay for the premium. If his fund was still around $400 million at the time of this comment, that means $32 million total, or $8 million per year. If he was paying 150 basis points per year for the protection (a number he gave in a 2012 interview), that means he could make $533 million if the bonds became absolutely worthless. My math could be messed up but that's my guess at the moment.

2012.04 Letter to Shareholders
http://www.businessinsider.com/hugh-hen ... ers-2012-4

2012.05.01 Milken Institute - Is It Time to Invest in Europe?
http://www.youtube.com/watch?v=ObMfmE3JMAc

2012.05.09 FT Op-Ed
http://www.ft.com/intl/cms/s/0/382ae750 ... z1uIiR8Wil

2012.10.26 talk at The Economist
http://www.livestream.com/theeconomist/ ... eeconomist

2013.11.22 - InvestmentWeek - 'I can't look at myself in the mirror': Hendry reveals why he has turned bullish
http://www.investmentweek.co.uk/investm ... ed-bullish

2013.12.03 - InvestmentWeek - 'I would buy Bitcoin if I could'
http://www.investmentweek.co.uk/investm ... if-i-could

“This is the environment where Bitcoin could go to $1m. There is no qualitative reason, but it is trending. If I could own Bitcoin, I would. If I own 3D printing, it is just the same thing,” he said.
Hendry added equity market fundamentals do not matter at a time when policy is misaligned, emphasising instead the ‘feedback loops’ created by US quantitative easing.
“There is no point arguing about the one-way causality we [as an industry] believe determines our processes. That is all about a belief this is rational.
“We want to believe markets go up because the economy is improving, because corporate cashflows are improving. But when you get monetary disturbances creating loops, it does not really matter.”