Monday, 6 October 2008
Tantallon Said to Have Closed Asia Hedge Fund as Stocks Tumble
Capital, founded by Merrill Lynch & Co. former head of sales Nicholas Harbinson, closed one of its hedge funds after the Singapore-based firm had its worst performance because of bad bets on Asian stocks, three people familiar with the matter said.
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Tantallon Said to Have Closed Asia Hedge Fund as Stocks Tumble
By Netty Ismail
6 October 2008
Oct. 6 (Bloomberg) -- Tantallon Capital, founded by Merrill Lynch & Co. former head of sales Nicholas Harbinson, closed one of its hedge funds after the Singapore-based firm had its worst performance because of bad bets on Asian stocks, three people familiar with the matter said.
The Tantallon Smaller Companies Fund, managed by Steve Sun, lost 25.6 percent this year, according to data compiled by Bloomberg, more than twice a benchmark that tracks similar funds. Assets shrank to $18 million as of end July, from as much as $29 million in February, the people said, asking not to be identified because details are private.
Assets in Tantallon Capital’s flagship Tantallon Fund, which underperformed peers this year following double-digit returns from 2004 to 2007, decreased 40 percent as clients withdrew money. Tantallon Capital is the fourth-largest hedge fund in Singapore with $1.43 billion assets under management.
The market turmoil, that wiped $19 trillion off global stock markets in the first nine months of this year, has hurt even the most experienced managers, said Jennifer Carver, who runs the Asian business of 3A SA, the alternative investment unit of Geneva-based Banque Syz & Co.
“There are a lot of funds out there that are effectively net long that are getting killed this year” said Hong Kong-based Carver, adding that 3A doesn’t invest in Tantallon’s funds. “The bigger funds have lost a lot of assets too, their performance has been bad; smaller funds have to close quicker because they don’t have the depth of the larger funds to keep going.”
Funds Fall
The smaller companies fund, set up in August 2006, lost more than a Bloomberg index that tracks the performance of long-bias equity hedge funds, which dropped 10.9 percent in the January-July period.
The Tantallon Fund, a long/short fund which seeks to profit from both gains and declines in stock prices, shrank to $877 million at the end of August, from $1.5 billion at the start of the year, following six consecutive months of losses.
Harbinson, who co-founded the investment firm in October 2003 and who manages the Tantallon Fund in Singapore, declined to comment. The Tantallon Fund, set up in November 2003, fell 25.9 percent as of end-August, after gaining 20.2 percent in 2007 and as much as 25.4 percent in 2004.
The firm also manages the Tantallon BRIC Fund, which declined 15 percent, and the Tantallon Japan Fund, which fell 6.6 percent in the first eight months of the year, Bloomberg data show.
The Tantallon Bass Rock Fund, which bets on gains in Asian stock prices, lost 28 percent in the January-August period. The MSCI Asia-Pacific Index shed 21 percent, as the U.S. subprime mortgage crisis brought down banks including Lehman Brothers Holdings Inc. and made borrowing more expensive.
‘Nimble, Flexible’
Asia-focused managers fell 9.7 percent this year, after returning 18.3 percent in 2007, according to Eurekahedge, a Singapore-based hedge-fund research house.
“In the long/short space, we are looking for guys who are nimble, flexible traders who can trade in and out and move quite quickly, not long-biased value investors which a lot of long/short funds are,” said Carver of 3A, which invests $5 billion in hedge funds globally. “We got a lot of funds in our portfolio that are making money, making a lot of money because they are trading these markets.”
Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets, bet on falling as well as rising asset prices and participate substantially in profits from money invested.
Harbinson has more than 20 years of investment banking experience, including stints at Merrill and Goldman Sachs Group Inc. Alex Hill, co-founder of Tantallon Capital, worked for Morgan Stanley’s wealth management business in Singapore.
Tantallon Capital was ranked by Alpha Magazine as Asia’s 11th largest hedge-fund manager as of March 31.
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