In our occasional series on the impact of the March 11 earthquake and tsunami on Japan-focused investors, here’s an intriguing tale of Philip Jabre’s $300m blunder.
It’s rare to hear such admissions — let alone explanations — from the mouth of the former star trader at GLG. And it kind of makes us wonder why anyone, having made such a colossal miscalculation, would want to talk about it.
It could be that market rumours got to the point where speculation was worse than reality. Either way, perhaps in Jabre’s world, any publicity is good publicity.
From the Wall Street Journal on Friday:
Few investors have made as many mistakes navigating markets over the past two weeks as Philippe Jabre.
Mr. Jabre, one of Europe’s best-known hedge-fund managers, bought Japanese stocks on news of the earthquake, and then suffered when the Nikkei Stock Average quickly tumbled 13%. Making matters worse, Mr. Jabre got nervous and sold his shares last week, just before a rebound in Japanese stocks. The miscues cost his firm about $300 million, the worst few days of his career.
But as Mr. Jabre reflects on his decisions, he isn’t sure he made many mistakes. “I keep thinking about it, what could I have done differently?” said Mr. Jabre, who manages $6 billion hedge fund Jabre Capital Partners SA. “I spent all last weekend asking questions” of friends, colleagues and clients, he said. “We couldn’t take the risk of the Tokyo Stock Exchange closing down, so we sold” Japanese shares.
Jabre had a very lucrative few years after he left GLG in 2006 and started his own gig. But suddenly, as the Journal adds, “many of his decisions are losers”.
Highly unlikely, but we’re just wondering if Jabre held a lot of Tepco stock.
Shares in Japan’s biggest electricity provider and operator of the stricken Fukushima nuclear plant plunged another 17 per cent on Monday to hit a low of Y696 — down a total of 67 per cent since the plant was damaged, to their lowest level since 1977.
Monday’s slide followed Tepco’s admission that Sunday’s readings of the highest radiation levels ever at the crippled plant suggest radioactive leaks have not been contained.
Sakae Muto, a Tepco vice president, said at a news conference on Monday that radioactive water may be leaking from the damaged reactors. Commentators say the latest news suggests a partial meltdown of the reactor’s overheated nuclear fuel rods.
A final word on Jabre: if you find the story moving, don’t weep too much.
Only in February, he was listed as one of the biggest gainers among Switzerland’s 300 richest residents, as Bloomberg reported back then:
Switzerland’s 300 richest residents saw their wealth increase 5 percent this year compared with 2009, Geneva-based Bilan reported, citing on its own research.
Their total wealth rose by 21 billion Swiss francs ($21.1 billion) to 470 billion francs, the magazine said. The list is headed by Ingvar Kamprad, the Swedish founder of Ikea AB, with an estimated 35 billion francs to 36 billion francs, according to the pre-release of an article to be published tomorrow.
The biggest gains included the fortunes of watchmaker Raymond Weil, tennis player Roger Federer and hedge fund manager Philippe Jabre, Bilan said.
Update: 8:40pm.
It seems only fair to point out the losses sustained in the wake of the earthquake and tsunami did not affect all of the five strategies run by Jabre Capital Partners.
Related links:
Japan – to buy or not to buy? – FT Alphaville
TSE takes on the ‘flyjins’ – FT Alphaville
ETFs are proving not so tradeable – FT Alphaville
In-depth report: Japan quake – FT.com