Glenrock Global Partners equity hedge fund reports a 5.2% loss in the second quarter of 2012. Overall in the second quarter, the fund gained profits on the short side from most of its investments in Asia except Japan. The winners on short positions were in the sector of apparels, electronics and recreational equipment. On the long side, US food companies came at the top while Japanese motorcycle manufacturers, airport management and US real-estate, oil, and homebuilding were among the bottom most.
The outlook for the month of June was different as the fund suffered losses in short investments (as opposed to gains for the rest of the quarter) but reported strong gains on the longside, which somewhat compensated for the decline in returns. The major contributions to profits was made by Japan. The fund was able to boost income through its capital in industrials, financials, energy, and gold mining. The principal losers for June were homebuilders, automakers, and a specialty retailer. The maximum gain was by 34 basis points, while the biggest loss was of 28 basis points. The fund was able to dive through the factors that contributed to lower performance in the pre-June period.
The average return on GlenRock’s long investments for the half year of 2012 was 7.8% ,while returns were down 10.5 percent on the short side. Overall the performance was down 2.7 percent YTD. GlenRock has never underperformed on an overall Long/Short performance attribution scale in the last ten years except in 2011.
The quarterly update comments on the pressures of debt-crisis from central banks in Europe and slower growth rate in China. GlenRock is wary of the constant government intervention that has distorted the key markets and jammed the price evaluation methods that were used previously. This makes it harder to make predictions on the worthiness of investments.
The letter also notes the uncommon distribution of payments on bond yields, while investors in Italy demand a higher yield, credits in Russia and Mexico pay only 3.8 percent to 2.8 percent. GlenRock states that to get through these confusing and ever changing financial times is to stick to a strategy and not be influenced by market noise.
Michael Katz is the founder and managing partner of GlenRock Global Partners, the fund began with a $10 million investment in late 1980’s.