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JANUARY 2021
INVESTOR LETTER Q4/2020
First of all, we thank all our investors for your continued
confidence in GreyJung & Tramondo Investment Partners AG. We
wish you all the best personally and professionally - be well, be
good and take care during these unprecedented times and, lastly, we
wish you a prosperous and healthy 2021!
For the quarter ending December 31, 2020, Tramondo GreyJung
Global Opportunities CHF F, EUR F and USD F returned 1.42%, 1.49%
and 1.75%, respectively, net of all fees, compared with the HFRI-I
Liquid Alternative UCITS Index’s (USD) 4.05%. For the year-to-date
period ending December 31, 2020 the Tramondo GreyJung Global
Opportunities CHF F, EUR F and USD F returned 5.59%, 5.74% and
7.23%, respectively, net of all fees, compared with the HFRI-I
Liquid
Alternative UCITS (USD) Index’s 1.91%. Assets under management
increased from CHF 23m to CHF 40m in 2020.
Please find below a summary of the year and the fourth quarter
of 2020 as well as our outlook.
REVIEW
2020 - A year for the history books has ended, marked by the
fastest bear market ever and the subsequent fastest recovery ever.
The most recent year will be the new benchmark for absolute-return
oriented strategies, and we are thankful to have delivered solid
consistent returns throughout an unexpected year.
STRICTLY CONFIDENTIAL / NOT FOR DISTRIBUTION
Dear investors,
-25%
-20%
-15%
-10%
-5%
0%FEB 19 MAY 19 AUG 19 NOV 19 FEB 20 MAY 20 AUG 20 NOV 20
TRAMONDO GREYJUNG MSCI ACWI USD HFRI LIQUID ALT. UCITS INDEX
CHART 1: MAXIMUM DRAWDOWNS
SOURCE: BLOOMBERG, BASED ON MONTHLY DATA
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5.19%
-20.49%
-11.06%
-23.30%
-1.58%
-15.13%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
TramondoGreyJung (USD)
MSCI ACWI(USD)
SMI (CHF, TR) Eurostoxx 50(EUR, TR)
BBG BarclaysGlobal Agg.Index (USD)
BBG BarclaysGlobal HighYield
Index (USD)
February March
CHART 2: RETURNS IN FEBRUARY/MARCH 2020 (COVID-19
CORRECTION)
SOURCE: BLOOMBERG, BASED ON MONTHLY DATA
CHART 3: CUMULATIVE RETURN AND CORRELATION SINCE STRATEGY
INCEPTION
SOURCE: BLOOMBERG, BASED ON WEEKLY DATA
2 GREYJUNG GLOBAL OPPORTUNITIES - INVESTOR LETTER Q4/2020
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Worth highlighting is our stringent risk management approach
during the unprecedented first quarter of 2020 when the fund posted
decorrelated positive returns of >2% in both February and March
2020 and limited losses in most of last year’s negative performance
months for the MSCI ACWI.
Referring to chart 3 on the previous page, we would like to
highlight our stringent approach which helped us deliver a
consistent and resilient return of 6.9% p.a. in USD (net, live)
during an unprecedented time. Given the fund’s strong focus on
capital preservation, it can serve as an attractive portfolio
stabilizer.
Lastly, the fund made it into last year’s HFM EuroHedge Emerging
Manager Awards finals for both the Multi-Strategy and Newcomer
categories. It feels good to be recognized for a disciplined and
circumspect implementation of our investment philosophy.
Additionally, leading alternative
investments publication Opalesque featured the fund in their
“Corona Fighters Collection – Funds that were up or protected
assets in Q1 2020”. This further underscores that active risk
management is essential for wealth preservation and performance
generation.
After a difficult September, we experienced a normalization
within most asset classes at the beginning of October. We could
confidently reestablish several positions such as our short US
dollar conviction trade and our opportunistic trading. October was
dominated by two topics – the resurgence of Covid-19 in Europe and
the US as well as the US presidential election. Hence, we shun away
from Europe while mostly being active in currencies and precious
metals as well as US growth stocks. In the end, markets spent much
of the month in a wait-and-see mode before the announcement of
widespread restrictions across Europe in the final days of the
month tipped the balance of risks to the downside and, thus, also
our opportunistic trading in US growth stocks. With some technical
damage and a big event ahead of us, we lowered our exposure to
benefit from newly emerging trends after the fact.
In years to come, November will likely mark a turning point
during the Covid-19 crisis. The an-nouncement of three vaccines
that are effective
against the virus drove a risk-on mood in markets and added fuel
to the post US election rally. On the positive side, our
opportunistic trading in stocks (barbell strategy consisting of
value and growth stocks) contributed the most supported by smaller
positions in our preferred theme of a weaker US dollar. On the
negative side, the relief underpinned by vaccine news caused a
position washout in precious metals, especially gold, which hurt
the performance. Lastly, we started being more active in Asia due
to its relative strength and multi-year breakouts (Japan, several
ADRs).
December ended what has been an incredibly volatile year by
sailing smoothly in its typical seasonal Christmas rally fashion
into the year-end within equities. Hence, due to the solid breadth
and constructive market action, we were mainly active in growth
stocks throughout the whole month. Additionally, smaller positions
in gold and short US dollar bets supported the portfolio.
For the quarter, the conviction and opportunistic book
contributed (gross) -3bps and +179bps, respectively. On an asset
class level, our main positive contributor was opportunistic
trading in stocks and short US dollar. Negatively affecting returns
were precious metals.
OUTLOOK
2021 will be all about navigating a post-pandemic world and
adhering to our adaptive investment style. Furthermore, the market
anticipates very consensual broad-based cross-asset views (bearish
US dollar, bullish emerging markets, value will outperform growth)
and is still super bullish in a market which is extremely
overbought. If we consider how overbought and how bullish the
markets started into this year, we have high conviction that 2021
will be a complex trading year and very likely not an outright
bullish year, especially for equities. Hence, global markets will
likely be less trending and choppier supporting an
adaptive/flexible investment style and opportunistic trading.
Our preferred views are long emerging market Asia (China,
Russia, India) + Japan as well as barbell strategies in terms of
single lines (mix of value and growth) in the equity space. We only
have a smaller size in precious metals momentarily. While staying
constructive, we await more fruitful signs from the technical side
to increase position
GREYJUNG GLOBAL OPPORTUNITIES - INVESTOR LETTER Q4/2020 3
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size and, thus, keep our conviction for higher prices (gold,
silver, platinum as well as gold miners). In our opinion, the US
dollar will continue to weaken in 2021. The collapse in US interest
rate differentials versus its trading partners, stronger global
growth, and a widening US trade deficit are all bearish for the
greenback. Therefore, we keep a short bias for the US dollar.
Lastly, we will strongly focus on yields and inflation
expectations and its significant cross-asset implications on value
vs. growth and commodities including precious metals for which a
structural comeback of inflation should lead to a new secular bull
market.
As for now, global markets need to take a breather either in
time or in price due to its extreme posi-tioning for us to get much
more aggressive.
As previously mentioned in our letters, we always have a clear
plan at hand of what we want to see and what we do not want to see
and will adjust our portfolio accordingly and focus on risk
management which is deeply rooted in our DNA. During what is likely
to be a volatile 2021 ahead of us, we remain flexible, open-minded
and try to take advantage of opportunities where they arise - day
by day. We will stick to our investment philosophy: "In investing,
we cannot direct the wind, but we can adjust the sails".
In our quarterly letters, we highlight investments we have made
to familiarize readers and investors with our approach.
Accordingly, we look at two of our biggest contributors within the
conviction and opportunistic books.
OPPORTUNISTIC TRADE – LONG CELSIUS HOLDINGS, USA:
Celsius Holdings, Inc. operates as a holding company. The
Company, through its subsidiaries, provides thermogenic
calorie-burning beverages. The Company markets its beverages
through multiple channels including grocery, drug, convenience
stores, gyms, and nutrition stores. Celsius is a very fast-growing
company targeting millennials in the United States and their
emerging consumer behavior for healthy lifestyle.
Trade:
1. Initiated a smaller position into a box consolidation with
low volume as of stellar earnings in August (+167% EPS) and
supportive news flow (Celsius overtaking
Red Bull on Amazon Prime for second place of best-selling
“energy” drinks, 1st place Monster Beverage)
2. Increased position after significant earnings growth (+100%)
and high-volume breakout from box consolidation (pyramiding up)
3. Partial profit taking (1/3 each) after a stellar rally into
strength of +20% and +50% from second buy level (2.)
4. Kept solid position as of S&P Small Cap 600 inclusion and
both supportive price action and news flow (giving the stock more
leeway as it performed strongly within a short period of time)
4 GREYJUNG GLOBAL OPPORTUNITIES - INVESTOR LETTER Q4/2020
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Best wishes,GreyJung PartnersTramondo Investment Partners AG
CONVICTION TRADE - LONG JAPAN / SHORT EURO STOXX 50 ->
THEREAFTER DIRECTIONAL LONG JAPAN:
Fundamental / Story:
We have a bullish stance on Japan mainly due to making new
multi-year-highs before other value indices, its constituents mix
of industrials, financials and tech while not being a crowded trade
(no one talks about Japan). A big winner for reflation trade.
Lastly, it benefits from the unfolding new Cold War between the US
and China, where Japanese industrial companies are well positioned.
In the beginning, we invested market neutral by shorting the weaker
value index EURO STOXX 50 (weaker technical picture and less
interesting sector mix as of the strong outperformance of
defensives during Covid-19). However, after the vaccine news in
November we immediately closed the short leg and put in a
directional long bet in Japan.
Technical / Chart:
1. Initiated a long Japan / short EURO STOXX 50 position into
NIKKEI absolute breakout and after Japan pulled back from its
relative breakout vs Europe (red line relative chart NKY/SX5E)
2. Vaccine news hit the market (9th of November) and we closed
EURO STOXX 50 short-leg
3. Traded around the position into support and resistance zones
as it started to consolidate. Target to increase over time as
conviction increases
GREYJUNG GLOBAL OPPORTUNITIES - INVESTOR LETTER Q4/2020 5
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LEGAL NOTICE
TRAMONDO INVESTMENT PARTNERS AG UNTER ALTSTADT 10CH-6302 ZUGT
+41 710 76 76F +41 710 76 [email protected]
THIERRY [email protected]. +41 41 729 08
47
FLORIAN [email protected]. +41 41 729 08 34
This document has been prepared by Tramondo Investment Partners
AG (the “Company”) regardless of specific or future investment
objectives, a particular financial or tax situation or the
individual needs of a particular recipient and is provided to you
for the exclusive purpose of personal use and information only. It
is based on specific facts and circumstances and prepared for a
specific purpose. It is not intended to be, and may not be, relied
on by any other person.
The information in this document constitutes neither a
solicitation, an offer, nor a recommendation to any person in
Switzerland or any other jurisdiction, to purchase, subscribe or
sell any securities or other financial instruments, to use it as a
sufficient basis for an investment decision or to conclude any
legal act of any kind to this end. Furthermore, this presentation
should not be construed as a financial, legal or tax advice.
The information and opinions expressed in this document were
carefully collected, analyzed and composed by the Company based on
publicly available information from trustworthy sources as of the
date of the creation of the presentation. They are subject to
change. The Company undertakes no obligation to update the
information herein and it should be noted that significant events
may have occurred since the date of the creation. Although the
information has been obtained from and is based upon sources that
the Company believes to be reliable, no guarantee is assumed that
the information is accurate or complete. Any reference to past
performance data is not necessarily indicative of current and
future returns.
The calculated values are solely indicative. The effective
allocation and results depend on investment activity and the
development of investments and may differ from the model results.
The implementation of an investment proposal can ultimately occur
differently and deviate from the structure presented or the
products mentioned.
Individual products or components of this document may have a
certain complexity and a high risk (e.g. derivatives, alternative
investments, structured investments). They are only intended for
investors who understand and assume the risks involved. Investments
in foreign currencies are subject to currency fluctuations,
investments in emerging markets or in special products are exposed
to special risks. An investment in a target described in this
presentation should be made only after careful study of the most
recent prospectus and a comprehensive due diligence on the targeted
assets. The Company recommends that investors carefully assess and
seek professional advice if needed with regard to financial, legal,
regulatory, credit, tax and accounting consequences before making a
final investment decision or implementing a strategy. The investor
assumes responsibility for the proper declaration of all assets and
their tax assessment.
The Company reserves the right to change at any time the content
of this document in part or entirely, at all times and without
prior notice. Although the Company acts with due care to ensure the
accuracy of the information contained in this document, it cannot
guarantee such. The Company or its employees assume no liability
for any damages (neither tangible nor intangible) that arise
through the use or non-use of the information contained herein,
especially no responsibility for the accuracy, completeness,
reliability or comparability of the information contained herein
relating to third parties that is based solely on publicly
available information. Without prior written consent of the Company
this document shall not be copied, referred to or disclosed, in
whole or in part. This applies in particular to the Company’s
logo.
Tramondo Investment Partners AG is incorporated in Switzerland
and is FINMA licensed and regulated.
6 GREYJUNG GLOBAL OPPORTUNITIES - INVESTOR LETTER Q4/2020
