TwinPeak’s 1H2016 NAV Results (Excerpt)

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TwinPeak’s 1H2016 NAV Results (Excerpt)

Below are excerpts from the quarterly report of a private family office we manage. Results are only audited on an annual basis.

(EXCERPT)

December 31, 2015

To the Shareholders of TwinPeak:

Corsair Took A Hit From Small-Cap Underperformance In Q3; Says Evergrande Not The Next Lehman Brothers

Corsair CapitalCorsair Capital was down by about 3.5% net for the third quarter, bringing its year-to-date return to 13.3% net. Corsair Select lost 9.1% net, bringing its year-to-date performance to 15.3% net. The HFRI – EHI was down 0.5% for the third quarter but is up 11.5% year to date, while the S&P 500 returned 0.6% Read More

TwinPeak NAV (the “TWIN”) increased 3.40% versus a 3.05% loss for the iShares Core MSCI Pacific ETF (the “MSCI Pacific”) for the 6-month period that ended December 31, 2015. The following table compares the TWIN’s unaudited performance (after fees) with that of the MSCI Pacific for various periods ending December 31, 2015.

Screen Shot 2016-01-05 at 10.42.57 AM

At December 31, 2015, the value of a SG$10,000.00 hypothetical investment in the company at its inception is worth SG$10,340 compared to SG$9,695 for the MSCI Pacific.

Market Commentary

As mentioned in the last quarterly update regarding the slowdown and instability in Emerging Markets, our stance remains the same. That is equities within the region are cheap.

Our core market – Singapore, have tumbled 15% this year, putting them in the same league as Greece. Shares on the MSCI Singapore Index trade at 1.1 times the value of companies’ net assets, compared with a multiple of 2 on a measure of global equities. The gap between the two widened this month to the most since May 2003. On the same note, Hong Kong is trading at valuations similar to that during the Asian Financial Crisis period. During that period, the lowest price-to-book ratio of the Hang Seng Index was around 1.0x. Today, the index trades at a 1.2x price-to-book ratio.

“Sentiment is extremely bearish, approaching levels seen in the depths of previous crises. Three decades of investment experience in Emerging Markets teaches that panic selling always creates opportunities.”

— Richard Titherington, JPMorgan AM CIO

Negative economic news continued to buffet investors around the world. Higher interest rates, brought about by the recent Fed rate hike, imply higher cost of capital for companies and investors alike. Oil prices fell to their lowest in a decade against a backdrop of a stuttering Chinese economy. The economies of Hong Kong and Singapore, as global entrepôts were not spared. Fear is on the rise and investors’ overreaction in stock markets contribute to the widening gap between reality and valuations. But, it is from these in which investment opportunities are born.

In this uncertain climate, diligence and conviction allow value investors to stand above the rest and capture the opportunities presented. We have utilised the cash to purchase new and accumulate existing undervalued equities within our four core markets. However, some cash are maintained in the event that markets do get cheaper.

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I developed my passion for investment management especially equity research at a relatively young age. My investment journey began when I was 20, at a point in time where markets were still recovering from the Global Financial Crisis. My portfolio started from money I saved over the past years and through working during the holidays. I was fortunate to have a good friend with common investing mentality to began my journey towards value investing. To date, we still research and invest in companies together, discussing valuations and potential risks of a company. To date, I manage a fund with a value investing style. Positions are decided upon via a bottom-up approach or smart speculation (a term I came up with when buying a stock for quick profit due to a mismatch in prices in the market due to takeovers/selling of a subsidiary or associate). Apart from managing my own portfolio, I enjoy sharing my research with family and friends, seeking their opinions and views towards the stock. Reading Economics in London, I constantly keep up with the financial news in Singapore & Hong Kong. Despite my busy schedule, it has not stopped me from enjoying other aspects of life. I enjoy a variety of activities in whatever free time I may have – endurance running, marathons, traveling, fine dining, whiskey appreciation, fashion. Lastly, I enjoy meeting new people, discussing ideas and gaining new perspectives towards issues in the world.
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