Famed Bear Spitznagel Posting Double-Digit Gains

Nov 25 2014 | 1:24pm ET

The last few years have been tough on market bears, and short-bias hedge funds have been among the worst performers during a rally that’s now strongly into its sixth year. But one noted pessimist has taken it all in stride, it turns out.

For years, media reports have indicated that Mark Spitznagel’s Universa Investments has suffered small losses as stocks have soared. Apparently, the opposite is true: Even as stocks skyrocket, Universa has posted gains, sometimes big ones, The New York Times reports.

In recent materials sent to investors, Universa said it returned 30% last year, nearly as much as the Standard & Poor’s 500 Index. And it claims its strategy has produced consistent gains since the market began to rise in 2009. And it is up 10% this year, again just slightly behind the broader markets.

The firm’s success is due to its combination of bearish bets with a broad stock portfolio, it said. Spitznagel has called the strategy “responsibly long.”

But he’s still preparing for the crash he is certain is coming: Spitznagel said Universa is positioned to rise about 16% if the S&P 500 plummets 30%.

“The Fed has created a trap in this yield-chasing environment,” he told the Times. “It allows you to be long, but it gets you in position to be short when it’s all over.”


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