The fund rose +.96bps for the month of June, marginally underperforming regional indices. We are +22.22% for the first half, well ahead of the regional benchmark gains of +9.6% and +11.25% (ex-Japan).
Although held back by a mark to market loss of -87bps in our long yen position, on which more later, our equity book performed strongly, +1.82%, led by gains in Hong Kong and Australia/New Zealand.
The Tantallon India Fund closed flat (+0.23%) in June (+5.5% for the quarter), after expenses. The volatility over this past month is certainly reminiscent of the ‘taper tantrum’ from 4 years ago, as hypersensitive markets look to (re)calibrate the Fed’s, the ECB’s, and the Bank of England’s respectively muddled messages on ‘normalization’ and an exit from prolonged monetary accommodation. We would also make the point that the significantly heightened volatility would suggest that the markets seem to be poorly positioned for 1) the extent of the Chinese crack-down on on-shore liquidity and leverage, 2) the forced unwinding of the long technology/short energy trade, and 3) Central Bankers who seem to be signaling an intent to lookthrough ‘transitory’ declines in key inflation measures given their concerns on tight labor markets and elevated asset prices.
The fund went live at the beginning of the quarter and started deploying funds after a big run-up of the technology sector in 2016. We exited the quarter with 10 positions and 50pct of cash deployed.
On the technology front, we built our positions in the cyclical names such as Micron, Hynix, Sumco and Global Wafers which all turned into contributors for the quarter. We believe this is one of those once in a decade opportunities for the tech cyclicals. We were more selective in the growth names as valuations here are stretched and focused on Japan turnaround opportunities.
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$32 million
YTD results : +22.22%
Lifetime results : +117.48%
Current AUM : US$23 million
YTD results :+32.64%
Lifetime results :+25.26%
Current AUM : US$10 million
YTD results :+1.30%
Lifetime results :+1.30%
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.