As a graduate trainee at UBS Group AG in Sydney, he was wowed by friends getting rich by day-trading tech stocks in 2000. So he spent his first few paychecks on five dot-com shares. Four crashed to zero, and the fifth lost half its value as the tech bubble burst.That lesson was so brutal that it helped turn Clark, now 45, into a career contrarian. These days the hedge fund he runs for London-based Horseman Capital Management is prepared for a market crash.
But Clark is holding steady. His contrarian thinking has withstood a decade-long bull market. He's been net short equities since 2012 and made money. In each of the S&P 500's worst five months since 2012, Horseman Global earned bumper profits. And in the most recent sell-off, in December, when the index suffered its biggest loss since early 2009, Horseman's fund surged 13.5 per cent.
Tim Ng, chief investment officer of Clearbrook Global Advisors, says his fund pulled its money for similar reasons. "The stretches of negative performance and the high volatility of monthly returns became a consistent drag on our portfolio's overall return, which prompted us to redeem," he says.The vicious December sell-off, crowded trades, low trading volume even during market rebounds-these are signals to Clark that the market is about to crack. Which for him is good news.
The transition was painful. The $US3.2 billion fund that Clark inherited sank a staggering 96 per cent, to $US111 million, in just two years as clients, spooked by the management change, withdrew their money. By 2011, Horseman Global had shrunk so much that it was barely economical to run. Clark concluded in 2012 that if he didn't become a short seller, there was no reason for clients to pay him the kind of fees hedge funds charge.