Miura Global, a hedge fund seeded by Tiger Management’s Julian Robertson and founded by Francisco Alfaro and Richard Turnure in 2004, was up 3.2% in the second quarter. According to an investment returns document reviewed by ValueWalk, the fund is now up 7.4% for the year. Due to its positive performance, Miura Global’s assets have grown above $2 billion. Miura said in the letter that they will close their funds to new investments in the third quarter.
Miura generates alpha
Miura’s quarterly letter spoke of the fund’s success in generating alpha in its short portfolio throughout the second quarter. The fund profited in its bet against a European mobile component manufacturer that suffered after losing a patent suit. Miura was also up in its short bet against an automated retail solutions company. Losses on the short side were incurred in a touchscreen manufacturer and a server manufacturer.
The fund was able to win back the losses that occurred in its long positions in April by profiting in the following months. Positions that contributed a net loss in second quarter were in online fashion retailer ASOS plc (LON:ASC) and Azimut Holding SpA (BIT:AZM), an Italian company that markets and distributes asset management products.
Miura bullish on Southern Europe
Miura is bullish on the recovery that is currently playing out in Italy, Spain and France. As a result, the hedge fund has invested in a Spanish construction and engineering company, Sacyr SA (BME:SCYR). Miura believes that Sacyr has several crown jewels in its business, with one of them being TESTA, its real estate group. The fund thinks that a recovery in Spain’s real estate market will benefit its positions in the region.
Macau’s gaming revenue is the key
The fund has suffered some retraction in one of its Chinese positions, Melco International Development Limited (HKG:0200). Melco International depends on revenue from Macau’s gaming market. Melco itself is an entertainment company that provides catering services. Macau relies heavily on gambling tourism, as mass gaming revenue was up 29% and 35% respectively in the past two quarters. However, the VIP gaming segment is under pressure due to China’s tighter regulations against corruption and a weak property market. Luckily for Melco, VIP gaming is not the major profit maker for the company. Miura states that 75% of Melco’s EBITDA relies on the mass gaming market. The hedge fund is going long on Melco International while shorting another company that relies much more heavily on VIP gaming to drive growth.
The fund has a long position in Hotel Shilla Co Ltd (KRX:008770) (OTCMKTS:HSLLF), which is based in Korea. Miura has held on to that investment for well over a year now. The fund thinks that tourism from China will benefit the hotel, as Chinese visits to Korea increased 60% in the second quarter.
Altice and Numericable
Based on its positive view of cable operators with high potential for growth, the fund initiated new long positions in Altice SA (AMS:ATC) and Numericable Group SA (EPA:NUM). Altice is a French cable and telecom services provider that owns a 74% stake in Numericable. Miura said that Altice is a smart acquirer that likes to tap into companies which operate in ignored geographies.
Numericable caters to nearly 10 million homes in France. The company is expected to gain a stronger foothold as French demand for high speed (greater than 30 Mbps) internet surges. Numericable is the leader in the broadband internet sector in France since it has a better quality of network compared to its copper-based competition.
Miura also thinks that Numericable’s acquisition of SFR, Vivendi SA (EPA:VIV)’s subsidiary, will be highly beneficial for the company. Miura said that SFR has the ability to increase subscribers for Numericable and will make it a major player in the B2B market. In addition to this, the recovery in the French mobile market will further augment the worth of the SFR acquisition.
Miura’s other positions include Liberty Global plc (NASDAQ:LBTYA) and Charter Communications, Inc.(NASDAQ:CHTR).