The fund rose +4.4%, leaving us up +37.04% for the full year.
There were no excuses for not making good money this year, and while we succeeded in avoiding some of the most spectacular gainers in the region, notably Samsung and the Chinese internet and financial names, we managed to eke out some respectable returns from a portfolio which I suspect looks very different from the consensus. Our long book in fact rose +45.5%, but losses from our residual futures positions in January before the fortunate epiphany dawned that we should just load up the truck and stop worrying, cost us -2.29%. And after an exceptional year in 2016, in which about the only thing we got right were our currency views, our stubborn optimism on the JPY, both as a beneficiary of geo-political stress and as a beneficiary of an eventual reduction of stimulus by the BoJ, cost -600basis points.
At the outset, a very Happy, Healthy, and Prosperous New Year to you, and your families!
The Tantallon India Fund closed +4.21% in December, after expenses. For the year, the Fund was up +59.14% versus MSCI India posting +36.84%.
It’s been a good year, with the markets responding positively to the BJP continuing to strengthen its hand politically, Modi’s steadfast anti-corruption/pro-reform agenda, the real economy absorbing, and then rebounding from the disruptions from demonetization and GST implementation, the recapitalization of the government banks, the surprise Moody’s sovereign upgrade, sustained flows into domestic equity funds, and importantly, our portfolio companies delivering on top-line growth, margin uplift, and earnings growth.
The fund ended a strong year with a down month as the commodity semiconductor correction continued in early December and stopped us out of several of our holdings. The fund registered a gain of 24.4% in its inaugural year after netting out expenses, a one-time tax payment and performance fees from the gross gains of 29.4%.
The fund’s equity holdings posted gains in excess of 50% for the year. Incremental timing of investment during the first half of the year and a cash level in excess of 15% during the second half of the year are key reasons for diluting these superior equity returns. While cash levels stood again at elevated levels of 45% at year-end as most of our commodity tech exposure was stopped out, we have since built up our equity holdings to above 85%.
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$37 million
YTD results : +37.04%
Lifetime results : +143.86%
Current AUM : US$37 million
YTD results :+59.14%
Lifetime results :+50.28%
Current AUM : US$14 million
YTD results :+24.40%
Lifetime results :+24.40%
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.