The fund rose +6%, comfortably ahead of flat to marginally firmer regional indices, lifting our NAV to +15.85% for the year. For the 6th or 7th time- I’ve given up counting- since 2008, we breach our old high water mark, but as we are no longer charging performance fees (there having been neither performance nor fees) this is of purely forensic interest!
The long book returned +5.16%, and we made a (realized) gain of +84bps short JPY. Within the portfolio the single biggest contributor was Vallourec, which bounced back hard after February’s results-induced weakness, and added +1.42% to NAV. India in aggregate was the largest contributor, adding +2.55%, with notable strength in Kotak Bank, and new-comer Cox and Kings, an Indian travel operator with growing interests in hostels and private education initiatives which the market we believe is ignoring.
The Tantallon India Fund closed up +6.73% in March, closing the quarter up +25.73% after expenses; US$8.9bn in foreign fund inflows in March into Indian equity and debt markets marked a fifteen year high, exceeding total foreign inflows for all of calendar 2016, as investors start to internalize both a positive re-set on earnings expectations and real legislative/reform momentum after the BJP’s stunning victory in the state elections in UP.
This has been an extraordinary quarter in the markets: reflation trades in the US, Japan, and Europe; multi-billion dollar hostile bids for 100 year old brands; jet-fueled Chinese recovery stories; the ‘hope’ of production discipline triggering significant energy and commodity stock price moves off the lows; significant asset allocation driven flows into Emerging Markets suggesting some mean reversion after years of serial underperformance; a sharp reversal of the panic selling in India at the end of last year; and even signs of complacency on US Treasuries!
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 : +15.85%
Lifetime results : +106.15%
Current AUM : US$20 million
YTD results :+25.73%
Lifetime results :+18.72%
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.