Despite surrendering over 300basis points in the last 2 trading days, the fund closed up +6.09% in January, outstripping vigorous rises in the regional indices by roughly 200bps. Returns were led by Japan, with our long JPY position contributing +2.8% and our equity positions a further +1.25%. India disappointed and detracted -2.4%, but strong rises in our Chinese copper company MMG, and a sharp rebound in Vallourec, both benefiting from a surge in commodity prices, helped our overall equity portfolio to gains of +3.27%. Sberbank and A2Milk also contributed handsomely.
The Tantallon India Fund closed down -1.87% in January, after expenses. Volatility is back, in spades; the potential for significant interest rate, currency and equity market volatility as global central banks ‘normalize’ monetary policy is being exaggerated by margin calls and the forced unwinding of leveraged, increasingly complex, supposedly uncorrelated, algorithm-driven trading strategies. In an India-specific context, the imposition of a 10% long-term capital gains tax in the budget, served to further dampen investor sentiment.
The fund had a strong start into the year with a 4% gain but cracks in the technology bounce and the overall market rally were appearing toward the end of January after setting new record highs in the week of January 22.
The fund started the year with a 43% cash position after selling down a majority of its cyclical commodity semiconductor positions in December. It ended January with a 12% cash position after establishing several new positions in sustainability companies such as SQM (lithium), LG Chemicals (batteries) and Nidec (motors) as well as tech companies Murata and Nvidia with battery and autonomous vehicle exposure, respectively.
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$41 million
YTD results : +6.09%
Lifetime results : +158.72%
Current AUM : US$37 million
YTD results :-1.87%
Lifetime results :+47.48%
Current AUM : US$15 million
YTD results :+4.0%
Lifetime results :+29.4%
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.