Woodbine Capital is another fund which has short position in yen and has longs in Japanese equities, the investment theme is prevalent among several hedge funds and is one that Kyle Bass of Hayman Capital advises against. Bass calls this kind of investing ‘macro tourism’,where one is shorting yen and is long on Japan’s equities. From what we see there are a lot of macro tourists taking a ride in Japan. We just covered Q1 returns of TT International, which has gained from long USD vs JPY and several Japanese equities in March.
Woodbine was up 1.77 percent in March and finished the quarter up 3.3 percent. Going forward, Woodbine is taking a risk-on approach while choosing equities under the belief that Japan’s fiscal policy and Fed’s assurance of monetary stimulus will ensure growth in risky assets. Among Japanese equities, Woodbine has long positions in banks and exporters. The fund also sees a near term appreciation in Japanese housing and is therefore investing in REITs. While we do not know which equities Woodbine has profited from in Japan, TT International has gained big from Mitsubishi UFJ Financial Group Inc (NYSE:MTU) (TYO:8306), Tokyo Tatemono Co., Ltd. (TYO:8804) (PINK:TYTMY), Sumitomo Realty & Development Co., Ltd. (TYO:8830) and Bridgestone Corp (PINK:BRDCY) (TYO:5108).
In the currency book, Woodbine Capital is positioned on the short side of several currencies against the US dollar. The fund has short positions in the UK Pound (GBP), Euro and Japanese Yen while going long in Mexican peso against Dollar. Woodbine sees strength in Mexico’s new administration and is expecting new reforms that will help to diversify the country’s resources and thus increase growth.
Woodbine is holding onto its short in GBP versus the USD, in expectation of depreciation in GBP in response to easing from Bank of England as the new governor takes office. Woodbine also sees some UK equities that could benefit from weakness in GBP. Year to date, the sterling has detracted 6 percent against the dollar but was slightly up in March.