The fund rose +7.7%, taking our year-to-date advance to +52.3%. As my old partner Alex Hill caustically remarked, why couldn’t we do this when we ran US1.5billion!
Returns were again driven by our US names, as the accelerating boom in Nasdaq tech and e-commerce names lifted our Chinese plays in the same space. The equity book in total returned +9.5%, of which the US contributed +4.4%, predominantly SEA which added +3.2% to NAV alone. Our Australian names performed, with an overdue reaction to Fortescue’s recent results and a spot iron ore price now flirting with US130/tonne. Strength in Aristocrat, Magellan and Pengana was also welcome, while the AUD continues to rise, supported by commodity price strength, and shrugging off innumerable Chinese policy spats and the continuation of surely the most bizarre Covid restrictions on the planet. We exited our long AUD position far too early. In Hong Kong Xinyi Solar reported strong interim earnings and was +15% on the month, and most of our “green deal” plays were also stronger, with noticeable moves in NEL ASA, Ceres Power and Chemours. The only area of disappointment was Korea, where our fuel cell names and Samsung Electronics failed to participate, and Taiwan, where TSMC was essentially flat. We realized +1.2% in FX and having closed our NOK (also too early) and EUR positions now have no exposure. Offsetting these gains were losses of - 3.1% in futures, an unacceptably high number, principally shorts on S+P and DAX.
We hope that you and your families are healthy and safe.
The Tantallon India Fund closed up +3.38% in August with the June quarter earnings releases and management commentary surprising positively in the face of stark economic contraction and spiking Covid infections. The path to ‘normalization’ is in the resilience of the Indian rural and semi-urban economies, sector consolidation, and the tailwinds from accommodative global monetary and fiscal policies, targeted domestic stimulus, low energy prices, and a weak(er) US$.
The Fund rose 2.9% in August which lagged major markets. The tech sector and Tesla continued to power ahead in the US while the tech sector in Taiwan and China corrected. Our major holding eMemory also consolidated after a strong run from the March bottom followed by record operating profits in Q2. We continue to expect strong results during Q4 to make for further upside into 2021.
The 2020Q2 operating results for the technology sector produced a solid rise of 9% yoy which shows acceleration from 3% yoy growth for 2020Q1. 2020Q2 earnings were almost back to 2018Q2 levels and appear to not just having weathered the 2019 downturn but also the Covid impact. While the sector’s earnings resilience is remarkable, we are surprised how aggressively the market values what will at best be steady growth from here.
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$40 million
YTD results : +53.31%
Lifetime results : +190.07%
Current AUM : US$19 million
YTD results :-10.39%
Lifetime results :+7.02%
Current AUM : US$15 million
YTD results :+23.6%
Lifetime results :+43.9%
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.