A 'Black Swan' fund posted a massive 4,000% return after coronavirus blew up markets

• A "Black Swan" hedge fund posted a 4,144% return last quarter after the novel coronavirus tanked markets.
• Universa Investments chief Mark Spitznagel trumpeted the massive gain in a letter to clients, The Wall Street Journal reported.
• Spitznagel - a protégé of Nassim Nicholas Taleb, the author of "The Black Swan: The Impact of the Highly Improbable" - warned that markets will fall further.
• "For people who are worried about having missed it, this sell-off has only taken back a few months of gains," he told The Journal. "I expect a true crash to take back a decade."
• Visit Business Insider's homepage for more stories.

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A "Black Swan" hedge fund that specializes in profiting from market shocks posted a 4,144% return last quarter thanks to the coronavirus sell-off.

Universa Investments chief Mark Spitznagel touted the stunning 40-fold gain from the fund's tail-risk hedging strategy in a recent letter to clients, according to The Wall Street Journal.

If an investor had just 3.3% of their assets in Universa and the balance in a S&P 500 tracker fund, they would have made a 0.4% return last month despite the benchmark slumping more than 12%, the newspaper said.

Spitznagel is a protégé of Nassim Nicholas Taleb, the author of "The Black Swan: The Impact of the Highly Improbable." He worked at Taleb's now-closed Empirica Capital, and Taleb serves as Universa's scientific advisor.

The Universa boss told The Journal that after a record bull run, markets have further to fall.

"If the pandemic doesn't pop this bubble then, of course, it will be something else that eventually accomplishes this," Spitznagel said.

A Universa spokesperson declined to comment in an email to Business Insider.

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Spitznagel gave a similar warning in The Journal after a "great month" for Universa in February.

"For people who are worried about having missed it, this sell-off has only taken back a few months of gains," he said. "I expect a true crash to take back a decade."

Spitznagel has scored outsized returns in the past. Universa netted more than $1 billion in a day - a 20% return at the time - when the Dow plunged by over 1,000 points in August 2015, The Journal reported.

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The hedge fund boss is a veteran at stomaching small losses for years in anticipation of the next market crash. Malcolm Gladwell quoted him in "Blowing Up," his New Yorker profile of Taleb in 2002.

"It's like you're playing the piano for ten years and you still can't play 'Chopsticks,'" Spitznagel told Gladwell, "and the only thing you have to keep you going is the belief that one day you'll wake up and play like Rachmaninoff."