The fund declined -3.74%, more or less in line with sharp falls in regional markets, reducing our year-to-date gain to +2.19%.
The surge in equity volatility finally tripped us up this month, with sharp falls in a number of our leading positions driven by the trade war rhetoric coming from the White House. An earnings miss at Nexteer, our Chinese auto component manufacturer, already seen as vulnerable on the tariff question, cost us -1.5%, and in aggregate our Hong Kong positions cost -3% with MMG our copper stock also sharply weaker. India, which has dragged our performance all year, cost an additional -1.46%, led by weakness in Tata Steel. Our overall equity book slumped -5.24%. This mark-down was once again mitigated by our JPY position which added +1.48%.
The Tantallon India Fund closed down -1.07% in March, after expenses, bringing a challenging quarter to a close with protectionist, retaliatory rhetoric and bellicose brinksmanship certainly claiming the headlines, exacerbating the hyper-sensitivity in equity, fixed income and currency markets to global central banks signaling the ‘gradual’ tightening of monetary policy. In India specifically, despite sustained flows into retail equity mutual funds, and earnings continuing to surprise positively on the upside, the ‘risk-off’ was accentuated in the small and mid-cap space, anticipating a reversion to the mean after several quarters of significant out-performance.
March was the second down month in a row pulling the fund into negative territory for the full quarter and the year.
Technology broadly continued to do well in the quarter. The Philadelphia Semiconductor Index (SOX) set an all-time high in March after breaking through the 2000 high (yes, 18 years ago) in January. The memory stocks in the US such as Micron, Western Digital and Seagate led the way. We had exited our large memory holdings late in 2017 and early this year and therefore no longer participated in this melt-up.
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 : +2.18%
Lifetime results : +149.21%
Current AUM : US$36 million
YTD results :-10.28%
Lifetime results :+34.82%
Current AUM : US$14 million
YTD results :-2.8%
Lifetime results :+21.0%
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.