The fund eked out a gain of roughly +1%, and we limp to the close of the first quarter +1.27%, lagging the broad market advance significantly.
Having vented my spleen on India last month the market proceeded to confound me by advancing smartly, and gains from Aegis and Reliance contributed the bulk of the returns of the fund in March. Aegis has been sold in entirety, and the Vakrangee position has been raised into one of the largest in the fund, as the miasma of negative publicity surrounding the firm dissipates and a new chief executive, known to us from his days at Blue Dart the air freight operator, begins to address market scepticism as the rebranding exercise in its “kendra” outlets gathers pace. Hong Kong and China, where the bulk of the fund is now invested, by contrast disappointed, with copper stock MMG under pressure as a result of an industrial dispute blocking access to its Las Bambas mine in Chile. Melco and our clutch of Chinese property companies were also lacklustre. Universal Robina in the Philippines was our second biggest contributor, but broadly speaking I am dissatisfied with the beta we are getting from the clutch of South East Asian names purchased in December last year; we have exited our positions in Thailand, principally CPAll, and will do the same in Indonesia.
The Tantallon India Fund closed up +9.08% in March with the broad market out-performing the large cap index for the first time in months, underpinned by expectations of strong earnings growth for the small and mid-cap universe, and a surge in foreign portfolio inflows into the market. The focus is now completely on the next General Elections (slated for April 11-May 22, 2019) and (rising) expectations of Modi managing to retain a Parliamentary majority.
The tech bounce off the 12/18 and early 1/19 lows made sense given the rate of share price collapse in 2018Q4. The rapid recovery close to AT highs has come as a surprise – a positive one for many of our holdings, a less pleasant one given our continuous high cash level.
A couple of indexes have renewed their AT highs in 2019: most notably the MSCI World Consumer Discretionary index, MSCI US Tech index as well as the SOX. In addition, the MSCI Utility index has also moved well beyond its post GFC high set in 9/17 during so far this year.
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$28 million
YTD results : +1.27%
Lifetime results : +98.95%
Current AUM : US$32 million
YTD results :+3.44%
Lifetime results :+20.02%
Current AUM : US$12 million
YTD results :+6.6%
Lifetime results :+13.9%
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.