A fund nicknamed '50 cent' made $2.6 billion hedging the coronavirus sell-off
- A fund nicknamed "50 cent" made $2.6 billion hedging the market meltdown, the Financial Times reported.
- London-based Ruffer invested $22 million in VIX derivatives that surged in value to more than $800 million during the coronavirus sell-off.
- Ruffer also made $1.3 billion from credit derivatives, $350 million from S&P 500 and Euro Stoxx put options, and $145 million from gold hedges.
- "We have performed in a lackluster way for years and part of the reason for that is because we were worried about a sell-off like this," Ruffer boss Henry Maxey said.
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An investment fund nicknamed "50 cent" made $2.6 billion hedging the coronavirus sell-off, according to the Financial Times.
London-based Ruffer - which manages roughly $23 billion in assets - invested $22 million in derivatives tracking the VIX volatility index, commonly known as Wall Street's "fear gauge." When coronavirus fears tanked stock markets, the VIX spiked to decade highs, netting the fund more than $800 million, the Financial Times reported.
Ruffer gained another $1.3 billion by investing in credit derivatives, which surged in value after corporate bond prices slumped, the newspaper said. It also netted $350 million from S&P 500 and Euro Stoxx put options, and $145 million from gold hedges.
The gains offset Ruffer's losses elsewhere, limiting the decline in its flagship fund to 0.8% last quarter.
"The essence of this was protection," Ruffer's investing chief, Henry Maxey, told the Financial Times.
"We have performed in a lackluster way for years and part of the reason for that is because we were worried about a sell-off like this," he added.
Ruffer is nicknamed after the "In Da Club" and "Candy Shop" rapper because it snapped up VIX derivatives for 50 cents each in February 2018, the Financial Times said.
Other investors made similar gains during the sell-off. Universa Investments - a hedge fund advised by "The Black Swan" author Nassim Taleb and led by his protégé, Mark Spitznagel - reportedly made a massive 4,144% return last quarter.
Billionaire Bill Ackman's Pershing Square spent $27 million on credit hedges that ballooned in value to $2.6 billion, offsetting losses in its equity portfolio and allowing it to cheaply boost its stakes in Berkshire Hathaway and other companies.
