By Simon Falush

So you thought safe-haven pharmaceuticals and food producers were a safe place to shelter your assets?

Think again, says Crispin Odey, the well-known hedge fund manager who thrives on a contrarian approach to equity investing. He tells Reuters that defensives could be the next target for short sellers.

“I certainly wouldn’t own them and they look like they’re becoming interesting shorts. It’s an interesting bit of the market that people aren’t looking at.”

He says that the traditional flight to safety for equity investors into stocks like pharmaceuticals and food producers may end in more fingers being burnt. He points out that defensive companies have high price/earnings ratios meaning that there’s plenty of scope for selling.

“What we have is the death of safety… (Defensives) look dangerous. You can either wait 17 years to get your money back or you can wait 2.6 years. What would you rather do?” Odey says.

“When you’re hitting new lows for the market you’re anticipating that you should be moving into defensives, but actually it looks like they’re the dangerous places.”

Odey’s European fund rose 10.9 percent last year helped by short positions on banks but earlier this month he said he has been buying UK banks because they are now so cheap.