Some hedge funds are poised to make serious money off of Trump's shocking win

Lots of people were surprised by Donald Trump's victory in the US presidential election.

But some hedge funds positioned themselves for this outcome - and might end up performing better than they did after Brexit.

"It's a surprising outcome, but I suspect that our [profit and loss] will be even better than 'Brexit day after," Nancy Davis, founder of macro hedge fund Quadratic Capital, wrote Business Insider early Wednesday just as the voter tallies started to favor Trump.

"We do well with any sort of unexpected move," Davis told Business Insider. "We did very well following the Brexit vote, and we did so today following the US election."

Quadratic's strategy doesn't place binary bets on outcomes, but rather uses options that "perform well during times of uncertainty," she said.

Other funds expect to make money, even if the political implications are hard to swallow.

"I expect to make money today - though it will be one of the most bittersweet up days in my memory," said Josh Packwood of New York-based Lucus Advisors.

And in some cases, the surprise election result could provide investors with opportunities.

"The truth is that emotional markets can create great investment opportunities for those of us who have a process in place which allows us to be disciplined, unemotional, and consistent in focusing on the long-term drivers of return," Valerie Malter, CEO of Matarin Capital Management, wrote to Business Insider.

Malter said that Matarin, which invests in equity markets, has "benefitted from staying neutral to political risk."

The strategy involves "buying great businesses, at inexpensive valuations, with shareholder friendly leadership, and with catalysts in place for short-term outperformance, and hedging out the rest."

Markets, for their part, expected Hillary Clinton to win, and the world's biggest hedge fund, Bridgewater Associates, predicted before election results came in Tuesday that a Trump win would sink markets.

Andrew Beer, managing partner at Beachhead Capital Management, said before markets opened Wednesday that "most people are on the wrong side of this ... given the moves in the dollar, equities and bonds."

Schonfeld Group Holdings, meanwhile, reduced its leverage - or borrowed money - that it was using coming into the vote on Tuesday, said CIO Ryan Tolkin.

"We had some distrust for the polls, especially in the wake of Brexit," Tolkin said. "We definitely came into the event with less exposure."

Packwood at Lucus Advisors said he expected a swift and volatile decline in the market, and that there are two possible scenarios under which that decline doesn't become a long-term bear market. He said:

• "People wake up next Monday and realize America is still here. We are still here. That the President of the United States is only so influential and that Trump has made a lot of enemies in the House and Senate that might make it difficult for him to implement the few number of fantastical initiatives that he has actually discussed in any coherent detail.
• "Trump removes the orange face paint and reveals to the world that the past 30 years have been an enormous production. He completely changes his tone and surrounds himself with respected advisors."

"I view #1 as decently probable," he said. "I view #2 as nearly impossible."

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