Greg Coffey, the renowned Australian hedge fund manager whose performance record earned him the nickname the “Wizard of Oz,” has emerged as a major winner amid this month’s market sell-off, according to a report by the Financial Times citing three industry insiders.
Kirkoswald Capital, the firm Coffey founded in 2018 after coming out of retirement, manages about $8bn and has reportedly made hundreds of millions of dollars during the recent market volatility. The firm had strategically positioned itself for a global economic slowdown and increased volatility, two sources confirmed.
The market upheaval was triggered by a combination of factors, including a surprise interest rate hike by the Bank of Japan, a shift away from high-priced US technology stocks, and concerns about a potential acceleration in the US economic slowdown.
On Monday, Tokyo’s Topix index plummeted more than 12%, marking the steepest drop since “Black Monday” in October 1987, before rebounding sharply on Tuesday. Additionally, the VIX index, which measures expected volatility in US stocks, surged to its highest level since the onset of the Covid-19 pandemic in early 2020.
UK investment firm Ruffer, which manages over $27bn in assets, also reportedly capitalised on the turmoil, with Tte Ruffer Investment Company, the firm’s investment trust, has up more than 4% since the start of July, according to FactSet data. Ruffer’s gains were driven by a long position in the yen, which has appreciated significantly against the dollar in recent weeks, and investments in safe-haven assets such as gold.
In contrast, large multi-manager hedge funds faced challenges as portfolio managers hit loss mitigation limits, forcing them to close out positions. The strengthening yen and stock sell-off led many investors to unwind the popular “carry trade,” where they borrowed in yen to invest in higher-yielding assets.
