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A hedge-fund chief and Warren Buffett acolyte posted a 40% gain during the brutal coronavirus sell-off after betting against the stock market for more than two years.

Kevin Smith, the head of Crescat Capital, last week revealed that two key funds made gains of 40.5% and 34.5% between February 20 and March 20.

"This is just The Big Short again," Tavi Costa, Smith's co-portfolio-manager, said in an interview with the news website Ozy on Monday.

Smith grew up reading Buffett's annual shareholder letters and told Ozy that Crescat was based in Denver for the same reason that Buffett is based in Omaha.

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A hedge-fund boss and Warren Buffett disciple made a 40% gain during the brutal coronavirus sell-off after more than two years of betting against the stock market.

Kevin Smith, the founder and investment chief of Crescat Capital, revealed in an investor letter last week that the group's macro fund posted a 40.5% gain between February 20 and March 20. Another key Crescat fund delivered a 34.3% gain over the same period, while the S&P 500 plunged by almost a third.

Smith has been bearish on equities for years, saying in a letter to investors in November 2017 that US large-cap stocks "are the most overvalued in history." He kept 50% of the fund's assets in cash and parked money in gold and silver as stocks continued their record bull run, the news website Ozy reported on Monday.

"This is just The Big Short again," Tavi Costa, Smith's co-portfolio-manager, told Ozy, adding, "It's very difficult, and emotionally, it's just brutal."

Crescat didn't respond to a request for comment from Business Insider.

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Smith's Buffett-esque patience shouldn't be a surprise. His father introduced him to investing by handing him a bunch of the billionaire investor's annual shareholder letters, Smith told Ozy.

Crescat is also based in Denver for a reason, he said.

"Buffett built his empire in Omaha," Smith told Ozy. "Not having that groupthink you might find in New York City is important."

Embracing Buffett's long-term perspective and shunning a herd mentality likely helped Smith to hold tight until stocks tumbled.

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"The crash was coming with or without the coronavirus pandemic," he told investors last week.

"It started from record highs, historic leverage, and the most fundamentally over-valued composite of multiples ever, higher than 1929 and 2000."

Smith remains net short on stocks as he expects "much more downside" for equities and corporate credit markets, he told investors. The key reasons for his bearish stance — an overvalued yuan and banking and real-estate bubbles in China — remain intact.

However, Smith said he was ready to switch tacks once Crescat's macro model indicates that markets and the economy have bottomed.

"We fully plan to become raging bulls," he said in the letter.

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