The Fund declined marginally, shedding 19basis points, leaving us +28.15% YTD. Regional markets were broadly weaker, with the MSCI ex-Japan index -1.3%.
September proved a roller-coaster month, with returns heavily influenced by yen volatility driven by rising tensions over North Korea. In the final analysis our long-standing (and large) JPY position cost us -2.4% on a mark-to-market basis, reversing a gain of nearly +3% earlier in the month as the yen weakened sharply from 107.30 to 113. We also took a substantial hit in Summit Ascent, our Vladivostok casino, which was largely pre-figured in our August report and cost -1.3%. That position apart however the rest of the portfolio performed creditably, with the equity book +2.20%, driven principally by strength in our other (larger) casino position in Macau, Melco, which added 2% to NAV, and by our Indian LNG/LPG importer and distributor Aegis, which also added 2% to NAV. Vallourec, our French listed steel pipe manufacturer, bounced back and added +90bps, and the meteoric run of our New Zealand protein-free milk producer, A2 Milk, continued, adding +50bps.
The Tantallon India Fund closed down -0.69% in September, after expenses. The broader market sell-off in stocks, bonds, and the rupee (which was down 2.1% for the month) was precipitated by sustained foreign fund selling through the
month, reflecting the general global “risk-off,” shorter-term concerns on the fiscal stimulus that might be required to off-set the GST-implementation triggered slowdown in industrial activity, and probably, most pertinently, the recent spike in crude prices on the back of the Turkish threat to cut-off oil exports out of Kurdistan.
At the outset, on the second anniversary of the Fund’s launch, we would like to simply acknowledge our gratitude to our investors: we are truly grateful for your trust, and for your continued support and encouragement; thank you.
September delivered excellent results with the fund gaining 8.9% on the back of strong gains from our holdings in memory companies and the EV battery supply chain. The memory stocks were buoyed by a strong set of results from Micron (FY17 ending 8/17) and continued tightness in the demand/supply situation of both DRAM and NAND. On the EV front, the announcements of accelerated EV adoption plans and/or plans of eventual sales bans of ICE cars (2025-40) kept the focus on the auto industry and EV supply chain. China then followed up its 2025 target of 7mn EVs on the with a New Energy Vehicle (NEV) credit mandate that forces domestic makers & importers to either produce a certain number of EVs or to buy credits. This plan should ensure at least 1m Chinese EVs produced by 2020.
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$38 million
YTD results : +28.15%
Lifetime results : +128.03%
Current AUM : US$33 million
YTD results :+35.38%
Lifetime results :+27.84%
Current AUM : US$12 million
YTD results :+20.20%
Lifetime results :+20.20%
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.