JP Morgan's $2bn loss costs hedge funds dear "The ratings of shares will suffer, and now we are anticipating regulatory comeback that will likely hurt JP Morgan and the entire sector," said a shareholder in the bank. Lansdowne Partners - whose co-founder Sir Paul is a major donor to the Conservative party - had more than 12pc of its mega-fund invested in JP Morgan. According to the latest Securities and Exchange Commission filings, the hedge fund owns 25m shares in JP Morgan, which at the beginning of last week was valued at more than $1bn. By Friday it was worth less than $924m. Lansdowne's stake of 0.7pc in the US bank makes it a leading shareholder in the top 15 of the bank's investor register. Before JP Morgan's fall from grace, Lansdowne's largest fund returned 9.6pc in the first eight weeks of 2012 on its headline $6.6bn UK equity fund. Mr Odey's $1.3bn European equity fund generated 21pc returns in the year to March 14. But, like Lansdowne, his fund bet heavily on JP Morgan. Odey's $96m holding at the start of the week made JP Morgan the second biggest investment in his entire portfolio. It lost almost $10m overnight on news of the losses. Both Odey and Lansdowne have made fortunes betting on UK banks, such as Barclays and Lloyds. But recently have looked outside Europe for investment opportunities, with continuing fallout from the euro crisis subduing growth. In his latest letter to investors, Mr Odey said his fund's investment objective has been amended to allow a maximum of 50pc to be invested outside Europe, rather than 30pc. Ironically, given JP Morgan's blunder, the letter praised US banking investments, saying: "Whilst locals in the USA are reasonably cautious about their own economic future, through European eyes, America has achieved the perfect prize - profitable banking and affordable housing." Mr Odey wrote that returns in Europe, without credit growth, can only be arithmetic. In contrast, returns in the US at least have the chance to be geometric. He is not alone in his sentiment. Last year, Lansdowne Partners upped its limit on non-UK holdings from 50pc to 90pc. GLG, part of Man Group, had, according to US filings, almost $25m invested in JP Morgan at the start of last week, which dropped to around $20m after the loss announcement. Hedge funds outside the UK have also been knocked back by the bank's losses. According to US regulatory filings they include Highfields Capital, with 9.35m shares; Maverick Capital 8.37m shares; Ruffer LLP which has 6.57m shares and Adage Capital Partners with 6.11m shares.