Here Are the Hedge Funds That Got It Right (and Wrong) in 2018
Hedge Funds: A list of all winners and losers of 2018
(Bloomberg) -- A handful of clear winners stand out among the hedge-fund managers and short-sellers who pitched their top trade ideas at the Sohn Investment Conference in Hong Kong a year ago.
BFAM Partners’ Benjamin Fuchs, APS Asset Management’s Kok Hoi Wong and Blue Orca Capital’s Soren Aandahl led the pack, with their short bets all paying off. It was the opposite result for bullish calls by Oasis Management’s Seth Fischer and Torq Capital Management’s Avinash Abraham, whose long bets failed to pan out.
As some of the region’s top managers gather again on Thursday in Hong Kong, here’s a look at how some of last year’s top ideas fared:
Benjamin Fuchs, CEO, BFAM Partners (Hong Kong)
The Call: Investors were under-estimating the odds of a decline in Tencent Holdings Ltd., which had surged 438-fold since going public in 2004. Fuchs pitched a complicated options trade that would pay off if the stock swung more than 15% either way and produce a windfall if the shares lost more than 20%.
Did It Pay Off? Yes. Tencent’s stock slumped 32% before the trade’s cut-off date in October, handing investors a profit of about HK$30 ($3.80) per share, or about six times the initial premium, according to a person familiar with the trade.
Seth Fischer, CIO, Oasis Management Co.
The Call: Fischer unveiled a campaign targeting Japan Asset Marketing Co., a listed subsidiary of Don Quijote Co., calling on it to pay a dividend and install a “truly independent’’ board. Failing that, it should privatize. Fischer said the shares had the potential to rise about 50%.
Did It Pay Off? No. The stock has slumped 30% since then.
Kok Hoi Wong, CIO, APS Asset Management
The Call: Wong launched a scathing critique of Chinese online retailer JD.com Inc., calling it a “super-hyped” stock. He lambasted it for poor corporate governance, “silly investments” and said founder Richard Liu has never run a profitable business.
Did It Pay Off? Yes, though not for all the reasons Wong cited. JD.com has had a horror 12 months, plunging 28%. Liu was arrested for alleged rape in the U.S. (prosecutors declined to press charges but the alleged victim is suing). A combination of trade war fears and stiff competition from Alibaba Group Holding Ltd. and Pinduoduo Inc. has battered its market share. “My investment thesis of the stock remains intact,” Wong said ahead of this year’s conference. “The stock is still very overvalued.”
Soren Aandahl, Founder, Blue Orca Capital
The Call: Aandahl doubled down on his attack on luggage-maker Samsonite International SA, expressing concerns about the CEO’s credentials and the company’s corporate governance.
Did It Pay Off? Big Time. Shortly after, Ramesh Tainwala stepped down as CEO in a dramatic victory for the short seller. The stock is down more than 35% since Aandahl’s presentation. “It’s been a great short,’’ Aandahl said. “The share price has converged almost exactly to our valuation of the business.’’
Wesley Wong, CEO, Oxbow Capital Management
The Call: Wong forecast Guangzhou Baiyun International Airport Co., which operates China’s third-largest airport, might climb 50% within 12 to 18 months as a new terminal increased capacity and retail rental income.
Did It Pay Off? Jury’s still out. Wong’s call looked in danger when the government unexpectedly put an early end to airport construction subsidies, sending the stock plunging 30% in June 2018. The slide continued until early this year, before the stock rebounded, and has now made up most of the losses.
Rajesh Sachdeva, CEO, Flowering Tree Investment Management
The Call: Sachdeva picked Vietnam Prosperity JSC Bank as a winner, predicting it would rise four- to five-fold within three years as the Vietnamese economy grew -- as long as “the world doesn’t come to an end.”
Did It Pay Off? While Sachdeva scored the top call of 2017’s Sohn conference, his 2018 idea hasn’t fared as well. The stock has plunged almost 30% since last year’s event, with revenue and profit growth hurt by a troubled global economy and nonperforming loans. But there’s still time for his idea to come good, with the bank pledging to use technology to attract more customers and improve services.
Avinash Abraham, CIO, Torq Capital Management
The Call: Abraham described Pacific Basin Shipping Ltd. as the Tencent of minor dry bulk shipping, saying the industry was ripe for a turnaround after a 10-year bear market. Pacific Basin was the best operator with diversified product exposure and a very undervalued stock price, Abraham said.
Did It Pay Off? No. Pacific Basin shares have slumped 30% in the past year, hit by worsening trade tensions and slower global economic growth.
To contact the reporters on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net;David Ramli in Singapore at dramli1@bloomberg.net;Tom Redmond in Singapore at tredmond3@bloomberg.net
To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Peter Vercoe
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