Crescat Mid-Month Performance Estimates & May Performance Reports
Positive performance month to date in the Crescat Global Macro Fund has been driven by a combination of long and short positions across six macro themes: Global Fiat Debasement, New Oil and Gas Resources, China Currency and Credit Bubble, Yahoo/Alibaba Spread, Security and Defense, and Aging Population. Below are MTD and YTD net estimates for all three Crescat strategies, through 06/15/2016.
June Mid-Month Net Estimates
Crescat Global Macro: +1.0%
Crescat Equity Long/Short: +0.6%
Crescat Large Cap: +2.0%%
S&P 500: -1.1%
2016 YTD Net Estimates
Crescat Global Macro: +2.6%
Crescat Equity Long/Short: +3.1%
Crescat Large Cap: +8.7%
S&P 500: +2.4%
Crescat Global Macro Fund Performance
Gold and silver have been on a tear, but we received a significant bearish reversal signal yesterday that drove us to cut our position substantially and book much of our profits on this the best performing long-oriented theme across all three Crescat strategies year to date. A big swing in Brexit sentiment toward the Bremain camp drove the reversal. Our Global Fiat Debasement theme is not going away in the long term, but we have had to substantially de-risk it in the near term to protect gains.
An exciting development for us this month is the re-emergence of positive performance in our New Oil and Gas Resources theme. A new aspect to this theme in the Global Macro Fund is our increased long positions in natural gas futures, which have been working extremely well. Barron’s picked up our bullish call on natural gas on June 4th in their Trader column. Favorable demand trends and slowing US natural gas production play into this trade. Also working on the short side of this theme, as a hedge to our natural gas longs, overvalued and unprofitable oil-heavy exploration and production stocks have been rolling over this month. We believe there is one more significant downturn ahead for these stocks in 2016.
Our China currency shorts are also starting to perk up again. This is our highest conviction trade, as we are convinced that China is not just headed for a currency devaluation but a currency crisis. We see the crisis being catalyzed by newly emboldened positioning among large global hedge funds against a backdrop of a Chinese banking crisis, world record quantitative easing, extreme currency overvaluation, and continued pressure from capital outflows. We are convinced that it is not Brexit, but rather the China Currency and Credit Bubble that is the biggest risk in the global financial markets today. It is a big opportunity for the Crescat Global Macro Fund.
Our Yahoo/Alibaba spread trade theme has been an extraordinary high risk-adjusted return theme that has been working well for us all year in both of our hedge funds. We believe there is substantially more to play out. Stay tuned for more on this in our upcoming quarterly Investor Letter and on the Q3 Crescat Capital Conference Call, scheduled for July 20th. Invites will be emailed in the coming weeks with dial-in and webinar information.
Lastly, be sure to download May performance reports using the links below. As always, we’re working hard to deliver the Value-Driven performance Crescat is known for, and we appreciate the continued support of our clients and investors.