The Tantallon Fund is a Cayman Island vehicle which invests in listed equities in the Asia Pacific region. The fund targets a concentrated portfolio of 35 names, with a 3-5 year investment horizon. At the portfolio manager’s discretion the fund may hedge its market and currency exposure, and short sell individual securities.

The Tantallon Fund: long only performance versus net return. Re-thinking our approach to the short side.

 In the 10 years since the fund’s inception the un-hedged long book of the Tantallon Fund has returned an annualised +12.2% compound. The net return is a significantly more pedestrian +7.2%. While the ability to go short protected the fund somewhat in the latter half of 2008, our experience since then, in the face of persistent intervention by regulators and central banks, has been consistently bitter. In mid-2012 we concluded that shorting was detracting from our ability to travel and research companies and resolved to discontinue the practice. However we saw little upside in surrendering the option and we retain the flexibility to hedge. An investor’s equivalent of the Hippocratic Oath, First, Do No Harm, is a discipline we have attempted, with modest success, to apply when looking at either market or individual stocks on the short book since then.

 

Long/Short Performance Since Inception

(Click on each month's data below to read the monthly pdf report)

 

Latest Investment Report

Tantallon Fund, May 2019

The fund fell -7.76%, under-performing sharply weaker markets. Our slim gains for the year have evaporated and we are -3.8% year-to-date.

I am kicking myself for allowing the prevailing “wisdom” that a trade deal was imminent and inevitable to override my long-term scepticism that Xi would ever agree to what amounted to a repeal of the China 2025 policy road-map. Although the majority of what we owned in China and Hong Kong was predicated on the assumption of continual stimulus in the event of the trade dispute turning ugly, the mark-downs across the board on the volte face in the talks were savage, and our China exposure, in Hong Kong and the US, cost the better part of 6%, with particularly savage falls in MMG (partly due to further industrial action in Peru), Melco, and Alibaba. India was costly as Vakrangee surrendered much of April’s sharp gains, and Pengana in Australia cost the better part of 1% as did our sole Korean holding, Hyundai Development. The long book as a whole was -9.9%, and only gains from our positions short AUD and long JPY lessened the pain, contributing in aggregate +2.1%.

Read full report (pdf)

Last Three Months Reports (pdf)

 

For details and performance of our other funds, please check:

The Tantallon India Fund

Tantallon Tech & Sustainability Fund

 

Other News

Post card from Iran

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.

 

News from Ukraine

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.

Previous Performance Data & Reports

Tantallon Fund Details