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The Kingtide Blog

Portfolio managers shun investing in own funds

Do fund managers with ‘skin in the game’ perform better?  Although this article and accompanying research is a few years old, it unsurprisingly confirms that portfolio managers who are invested in their own strategies perform better.  More specifically, those managers who are heavily invested perform even better.

More than 30% of FUM at Regal Funds Management is founder and employee capital.  We believe this sets the benchmark in Australia of true investor alignment.  Read more

Backing an early stage manager

At King Tide we are not afraid to back a manager at an early stage, if we can get comfort around their strategy and ability.  We believe the early years when managers are focused, have relatively low FUM, and generally positive cash flows are often the best years.  We added Millex Ethical Fund in December last year.

Click here to read their latest monthly Factsheet.

Auscap remains bullish

With the doomsayers dominating the airwaves it’s nice to see one of our managers taking a contrarian position. In a recent Livewire article “Is negative sentiment creating opportunities?” Tim Carleton from Auscap goes on to list many of the reason they remain bullish on the prospects for the Australian economy.

Why the best performing hedge fund is selling

King Tide first invested in LHC in February 2014 and they have been a core holding ever since. LHC is now closed to new money which enables them to manage risk and maintain performance, aligning them with their investors.  This is something we value at King Tide.  Six of our underlying managers are now closed to new investors.

LHC has emerged as the top performing hedge fund in 2018-19, but now it’s selling some of its hottest stocks because prices are too high.

 

LHC Capital, the Sydney-based hedge fund which topped the returns table in 2018-19, says it is responding to a “valuation conundrum” caused by lower interest rates by selling its winning trades.

The fund manager is taking advantage of the strength in markets to offload its holdings in Pro Medicus and IPH, which it said were now “more than fully valued”.

Low interest rates have created a “valuation conundrum” and it was not clear if declining cash rates were in fact a buy or sell signal, Mr Hughes and Mr Aboud explain in their investment letter.

Read more: https://www.afr.com/business/banking-and-finance/hedge-funds/why-lhc-capital-is-selling-its-biggest-winners-20190723-p529t2