Against a backdrop of weak regional indices, the fund rose +1.44%, clawing back some of April’s losses, with some modest (+20bps) relief from a slight rebound in the yen. We are +3.58% year-to-date.
A welcome recovery in Nippon Sheet Glass, following strong quarterly numbers, was the main driver of performance, with that stock alone contributing +1.46% to NAV. We had increased our position here following weakness on the previous quarterly results, having been somewhat at a loss as to how so cheap a stock could be so volatile, and that bet has paid off. Of the four heavily-indebted cyclicals we have owned across shipping, copper, seamless steel pipe and float/auto glass, NSG had been the most disappointing in performance terms, but the +25% jump in the stock in May has rectified that.
The Tantallon India Fund closed down -4.66% in May, after expenses. It’s been a particularly difficult month for small and medium sized companies that have been sold down rather indiscriminately – despite fundamentals on the ground continuing to improve as evidenced by the strong GDP print, very positive corporate commentary, and a very strong earnings season. We would point specifically to (i) the spike in crude oil prices, and the implications of significantly higher energy prices for inflationary expectations and therefore, for tightening monetary policy, and (ii) US$ strength and the prospects of higher real interest rates, as the primary catalysts for the heightened risk aversion setting the tone for markets broadly.
The fund finished the month of May down 0.1% in line with the world markets that fell 0.2%.
Tech indexes powered ahead on the continuing strong commodity semiconductor names as well as the internet and SW names where we have no exposure.
Sustainability Tech featured little positive movement with the only exception of a 25% by CREE, the leading US maker of LEDs.
The Chinese solar sector started moving steadily lower in the second half of May and then at the beginning of June the news officially hit that China would substantially reduce the subsidy support for solar and wind energy which led to a rout in the solar sector globally.
There is so little information on Iran you cannot even find the Teheran Stock Exchange on Bloomberg. Yet this is an exchange with a market cap of US170billion, turning over up to US150m/day with zero foreign participation, entirely on the back of domestic mutual fund and retail investors.
In Lv’iv on the morning of my departure I attended the funeral of one of the casualties of the “anti-terrorist operation” in Donetsk. Loudspeakers relayed polyphonic chant from impressively hirsute Orthodox clergy to a cluster of old women and an honor guard, smoking furiously and in no mood to be photographed, waiting to transport the hearse the short distance from the altar to a waiting ambulance.
The Tantallon Fund commenced trading in November 2003 with US5.5m in assets.
In 2005 the Tantallon Fund was named Best Asian Hedge Fund and in 2006 Best Local Hedge Fund (Singapore)
We experienced explosive asset growth, with the fund soft-closing in October 2005 at US450million and hard-closing in January 2008 at US1.5billion. Peak assets, in all products, were US1.7 billion at the end of March 2008
During the financial panic of 2008 we waived 4 consecutive monthly gate-able events and re-paid US1.1billion to clients who needed liquidity, placing our client interests ahead of any business considerations.
The majority of fund AUM is currently internal capital.
Despite this extreme volatility in assets, our commitment to the business has not wavered.
Nick Harbinson and Alex Hill are the principals of Tantallon Capital Advisors, the advisory company to the Fund. We have known and worked with each other since 1990, and have between us over 60 years of investment experience in Asia. Experience in multiple market cycles has honed our ability to identify secular and cyclical economic trends, as well as catalytic triggers. We combine top-down macroeconomic themes with bottom-up stock picking, as well as complementary individual skills with deep sell and buy side industry experience and market knowledge.
Current AUM : US$39 million
YTD results : +3.58%
Lifetime results : +152.59%
Current AUM : US$37 million
YTD results :-11.73%
Lifetime results :+32.67%
Current AUM : US$14 million
YTD results :-5.1%
Lifetime results :+18.1%
In total, our principal investment team has over 80 years of experience in investing and financial markets. On average, our investment professionals have over 27 years of experience. The team today has weathered good times and bad times, bull and bear markets, staying together and remaining committed to our goal of achieving superior investment returns over the long term for our clients. Collectively, we are also significant investors in our funds. Our personal interests and those of our clients are completely aligned.