Crescat Capital commentary for the month ended July 31, 2016.
Also see top Hedge Fund Letters To Investors
We’re pleased to report July net performance estimates for all three Crescat strategies:
July was a good month for Crescat Capital’s Large Cap strategy with strength in three themes: Global Fiat Debasement, Rise of the Machines, and Security and Defense. These themes also benefited the long side of Crescat’s two hedge funds. Global Macro fared the worst of the three strategies in July as China tightened its monetary policy to strengthen its currency in the second half of the month hurting our yuan short positions that are unique to that fund.
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Crescat Capital – Performance Review
Eight themes generated positive performance in July while seven generated losses in our Global Macro Fund. Asian Contagion was also a poor performing theme in July in both hedge funds as our Australia related shorts worked against us. Below is a list of our current active macroeconomic themes:
Aging Population
Asian Contagion
Broadcast Auction
China Currency and Credit Bubble
Consumer Comeback
Debt-to-GDP Resolution
Digital Evolution
European Disunion
Fed Moderation
Global Fiat Debasement
Maturing Expansion
New Oil and Gas Resources
Rise of the Machines
Security and Defense
Yahoo/Alibaba Spread
August is upon us. It was only last August that the China twin debt and currency crises began to materialize in the global financial markets. In strengthening their currency in July, Chinese authorities may be once again trying to shake out currency speculators only to later give in to the next devaluation. It is no coincidence that August is a large coupon payment month for Chinese corporate debt. We are already seeing new liquidity injections on the first day of the month from the People’s Bank of China. We renewed money printing and looming debt defaults, we expect more downward pressure on the Chinese currency and its financial markets to materialize soon.
July performance reports will be available in the next few weeks. Thank you for the continued support as we continue to work hard to deliver growth and protection of capital.
Sincerely,
Crescat Capital
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