TT International, a $1.4 billion multi strategy hedge fund, is bearish on the metal mining sector, which is evident from a string of shorts in the sector as discussed in a previous post. Additionally TT also has a short bet in Anglo American plc (PINK:AAUKY) (LON:AAL). According to their latest Q1 letter, the short would be below threshold level since it is not disclosed publicly yet.
TT International Fund detracted 0.34 percent in March, finishing the quarter up 3.89 percent. In equities, the fund gained from shorts in Anglo American plc (PINK:AAUKY) (LON:AAL) and Banco Santander, S.A. (NYSE:SAN) (MCE:SAN), Spain’s largest bank. The fund profited from longs in Sanofi SA (NYSE:SNY) (EPA:SAN), Rolls-Royce Holding PLC (PINK:RYCEY) (LON:RR) and Novartis AG (NYSE:NVS) (VTX:NOVN).
On the other hand, short position in GlaxoSmithKline plc (NYSE:GSK) (LON:GSK) lost in Q1 while long positions in ArcelorMittal (NYSE:MT), Lloyds Banking Group PLC (NYSE:LYG) (LON:LLOY) and Volkswagen AG (PINK:VLKAY) (PINK:VLKPY) also incurred losses for the fund. As a result TT was overall flat in its European equity portfolio.
In the macro strategy, the fund was up on shorts in Eurostoxx 50, as European markets detracted on bad news from one country after another. Short position in the benchmark index is becoming popular with funds, Pennant Capital and Omni Macro have also reported profits from the position in Q1. TT was also profitable in Japanese stocks in March as several of its long positions moved up on news of fresh stimulus. TT’s longstanding position in long USD vs. JPY also gained.
TT International lost in its hedges in Nikkei index futures, long Greek bonds vs Short BTPs (Italian government bonds), shorts in US 10 yr treasuries and short in sterling against USD.
The letter discussed the latest weak numbers on housing, employment and expenditure and whether the US economy will suffer through a lax period in the next two quarters. The managers believe that the real after-effects of budget sequester would not be felt until late in the year in autumn quarter.
In the case of Japan, there is a vital fear that the current stimulus, if continued at the present rate, could hyper inflate the economy.
In the case of Europe, the situation has become even more dire with a rising debt crisis in Italy, Portugal and France. However outflows from Japan and strengthening of US economy can anchor Europe for a while.
TT TT International intoduced a new short in Euro against USD while paring long position in Potuguese bonds and shorts in BTP’s.