GLNCY Glencore Plc (PK)

Lansdowne Partners, one of the world's biggest hedge funds, has suffered a loss of nearly $1 billion in its flagship fund this year, as choppy markets wreak havoc with some of the sector's favorite bets.

Lansdowne, which runs around $21 billion in assets, has seen its $12 billion Developed Markets fund lose 7.9% this year to March 4, according to numbers sent to investors and reviewed by The Wall Street Journal. That equates to a loss of around $950 million.

Last year, the fund gained 17%, according to Lansdowne's latest letter to investors, which was reviewed by the Journal.

A spokesman for the firm declined to comment.

Like many hedge funds, Lansdowne has been hit by the unwinding of favored trades this year. In particular, a rebound in mining-sector shares, against which managers have been putting on bets, has hurt funds' performance.

Lansdowne, which is based close to London's expensive Berkeley Square, made big gains last year from its bet against Swiss commodities company Glencore PLC, whose shares dropped 70% on worries about a slump in commodity prices and the company's debt.

But Glencore has rebounded around 56% this year, helped by rising commodity prices. That has hit short sellers—who borrow stock and then sell it in the market, hoping to buy it back at a lower price—hard. Last week, Glencore Chief Executive Ivan Glasenberg said he believed the commodities sector had bottomed.

Lansdowne fund managers Peter Davies and Jonathon Regis wrote in their letter to investors: "We continue to feel that the commodity space, especially energy, is facing long-term challenges that are far from reflected in equity prices." The fund was betting against the basic materials and energy sectors, according to January letter.

Lansdowne increased its bet against Glencore three times last month to 1.6% of the company's shares, according to regulatory filings. Hedge funds overall have increased their bets to just over 30% of the Glencore shares that are available to borrow from just over 5% in late September, according to data group Markit.

"It's too early to call the bottom on commodities," Crispin Odey, founder of Odey Asset Management, which runs $11.1 billion in assets, told the Journal. "We're still far from getting rid of capacity" in the sector, he said.

The firm has been betting against miners Anglo American PLC and Antofagasta PLC, according to regulatory filings.

Its European fund is down 2.5% this year to Feb. 26, according to numbers sent to investors. "If I'm right, this is a rally in a bear market," Mr. Odey added.

Write to Laurence Fletcher at laurence.fletcher@wsj.com

(END) Dow Jones Newswires

March 10, 2016 08:15 ET (13:15 GMT)

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