Philippe Jabre is “one of Europe’s best-known hedge-fund managers” according to the WSJ, and now that bio has an extra footnote.Jabre set his hedge fund back six months when he bought Japanese stocks as soon as the earthquake hit, then sold them before the market zoomed upward.
In monetary terms, Jabre, the CEO of his eponymous $6 billion hedge fund Jabre Capital Partner, lost about $300 million.
Jabre was a superstar trader at GLG before he left to start his own shop in 2007, and has always been known in the industry as an aggressive risk-taker.
When Jabre heard about the earthquake, he bought a ton of Japanese stock. Then the Nikkei dropped 13%. So he liquidated. “We couldn’t take the risk of the Tokyo Stock Exchange closing down, so we sold” he said.
From the WSJ,
At the end of February, Mr. Jabre’s firm was cautious about Japanese and U.S. markets. He told a colleague he was hoping for a pullback in prices, so he could plow some money in. On the Friday the earthquake hit, Mr. Jabre saw his opportunity as stocks weakened… Mr. Jabre… was convinced Japan would rebound.
That day, he stole a few minutes in his private office and lit a cigar. He weighed his options before taking his spot on the firm’s trading floor… [and] directed his traders to exit the bearish futures trades, believing prices would rise. “We can take off our hedges and be 100% long,” he told a colleague at the time. Without the hedge, which had reduced his fund’s Japanese exposure to 9% of his portfolio, Japanese shares became 15% of his portfolio, a sizable wager.
But then the nuclear crisis at Fukushima worsened. The market sank further. Fearing that the reactor could explode, resulting in losses that could be fatal to the fund instead of just really bad, Jabre sold out of his Japanese positions. Within 48 hours, however, “Japanese and foreign monetary authorities took steps to stem the rise in the yen, helping shares rebound.”
In Jabre’s words: they “got whipsawed… We’re telling clients that we’ve lost six months of performance.”
According to the FT, in an article titled ‘An Unbeaten Risk-Taker,’ Jabre “established a reputation at a young age in the London investing community as both a risk taker and a brilliant trader.”
He was also slapped with what was, at the time, the largest fine ever against one person by the FSA — $1.2 million — for trades he made in a Japanese financial firm “after he received information about a coming convertible-bond deal from Goldman Sachs. It was the most high-profile regulatory probe in the history of the London hedge-fund community.”
And amazingly, he also once survived an avalanche.