Abenomics has been working well for a considerable number of hedge funds with short yen and long Japanese equity positions. Shinzo Abe’s no holds barred fiscal easing policy has bounced Nikkei to new highs which in turn have made Japanese equities more rewarding than ever. EurekaHedge Japan index rose 3.6 percent in March and was up an eye-popping 10.7 percent through the first quarter. We have mentioned returns from Woodbine and TT International who have not exactly churned outsized returns overall but have been ubiquitously profitable in their hedges in Japan.
According to Reuters, former Lehman Brothers trader David Baran’s profits in Japan have beaten all others. Baran has already gained an unreal 43.6 percent in Q1 and a +26 percent return in March alone. His timely bets in Japanese firms with a rich cash base have paid off like none other. Baran’s firm Symphony Financial Partners overlooks $300 million. A similar story is told by Hayate Investment Co. Ltd which is up 42 percent in Q1 after adding a +22 percent in March from profitable bets in Japanese stocks. Inflows into Japanese hedge funds have also picked up in the last few months which recorded their first net inflow in March.
Nippon Value Partners’ Japanese Equity Program with over $756 million under management has gained a brilliant 12 percent in the first quarter. NVP bought Kuraray Co Ltd (TYO:3405), a manufacturer of polymer chemicals and Asahi Diamond Industrial Co., Ltd. (TYO:6140) (PINK:ADIMF) in the last quarter. Asahi specializes in diamond tools that are used in the manufacture of semiconductor devices. The company is expected to show increased revenues as growth in the semiconductor industry boosts sales of Asahi Diamond. The company has a 30-35 percent market share in Japan. NVP previously had long positions in Aica Kogyo Company, Limited (TYO:4206) and Fujimi Incorporated (TYO:5384).
Woodbine Capital was up 1.77 percent in March and has gained +3.3 percent in the first quarter. TT International has profited from longs in a some real estate names in Japan and other equities including Mitsubishi UFJ Financial Group Inc. (NYSE:MTU) (TYO:8306), Tokyo Tatemono Co., Ltd. (PINK:TYTMY) (TYO:8804), Sumitomo Realty & Development Co., Ltd. (TYO:8830) and Bridgestone Corp (PINK:BRDCY) (TYO:5108). Both funds have a short position in yen and while both are not Japan focused hedge funds, the region makes up a significant part of the total exposure.
As some have packed big gains, there are others who have not been as successful. Ortus Capital Management is down 30 percent in the last two quarters. Nezu Kuma, a Japanese short-bias fund was down 15 percent in Q1. These funds were not hopeful that yen would weaken this much against the dollar.