Ms Dam will be responsible for maintaining Tribeca’s strong relationships with the firm’s existing wholesale and financial intermediary client base, as well developing new relationships and channels.

Ms Dam’s career spans over 20 years in the financial services sector. She joins Tribeca from Australian Ethical Investment where she spent seven-and-a-half-years in a variety of intermediary business development roles, most recently as regional manager. Before joining Australian Ethical, she worked with ING Direct as business development manager – wealth, and prior to this she spent seven years in a variety of business development roles at IOOF. She has also worked at Skandia, Westpac and BT.

Tribeca Investment Partner’s head of distribution, Alex Lupis, says Ms Dam is a welcome addition to the team as the business continues its growth plans to strengthen its presence in the Australian market.

“This newly created role underscores Tribeca’s commitment to the wholesale intermediary channel.

“Quyen brings a breadth of knowledge and experience to the role. She is a senior appointment with over 20 years of financial services experience, and 17 of those years business development roles. She has a proven track record in business development and managing adviser relationships and her appointment will significantly increase the depth of our business development capabilities in the wholesale market.”

This strategic appointment comes at a time of growth for Tribeca Investment Partners, which centralised its entire distribution capability in-house in August of this year.

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Jun Bei Liu

Tribeca Investment Partners expects the August reporting season to separate the ‘wheat from the chaff’ in listed companies, with its portfolio managers suggesting slowing economic activity, higher interest rates and higher labour costs will slow corporate earnings results.

Jun Bei Liu, lead portfolio manager of Tribeca’s Alpha Plus Fund is expecting the coming reporting season to be one of the softer reporting seasons in recent periods.

“We are expecting company revenue to be under more pressure and that margins will continue to move lower, given the slowing economic activity and higher inflation. However, this is a mixed bag when looking deeper into each sector.

“We are expecting consumer facing companies, such as retailers, to report in line with expectations as many have already downgraded. It is likely the first six weeks trading update will be softer than expected.

“We anticipate a cautious outlook statement from companies with higher costs, and freight costs in particular have moved up significantly. It will be interesting to observe share price reaction post these softer results from consumer companies as many are trading at high valuations.

“Healthcare will have better results this year compared to previous years, though the costs pressures mentioned above also remain high for this sector, and we don’t expect meaningful price impact.

Ms Liu says banks continue to have a strong capital and she expects more capital management initiatives to come from this sector. On the resources side, Ms Liu is expecting some underperformance given China’s economic weakness, but she notes there are companies still trading at a discount.

“Resources have been an underperforming sector heading into earning season. However, we believe large, diversified resource companies such as Rio Tinto (ASX: RIO) and BHP Group (ASX: BHP) are trading at a steep discount to NTA with a small earnings upgrade expected. This sector is likely to improve once it delivers to result expectations and pays out large dividends.

“Overall we are expecting the consensus forecasts to move lower in the single digits for FY25 on softer guidance which does provide a nice rebase before the expected interest rate cut next year,” says Ms Liu.

Meanwhile Simon Brown, Australian Smaller Companies Fund portfolio manager, cautions that higher interest rates could hit earnings growth of some companies.

“This presents risk to the earnings forecasts in for the first half of 2025. For now, we favour exposure to companies such as Flight Centre Travel Group (ASX: FLT) that will benefit from more affluent/less indebted consumers and those with the ability to grow under their own steam,” he says.

“Mining and associated sectors should benefit from buoyant commodity prices and easier operating cost environment. Outlooks will be influenced by Chinese economic conditions given their share of global resources consumption, but right now, margins are pretty good for Australian resources companies,” he says.

“While we agree that any surplus of material across the commodities sector is unlikely to be helpful of prices in the very short term, this is not going to incentive new tonnes in the medium term to fill the fast-growing need for product,” Mr Brown said.

“Interest rate sensitive sectors such as REITs have also done well recently in anticipation of a near-term rate cut in the US, despite sticker inflation here. Given the underlying strength of the respective economies, continued stimulus and upcoming elections, we don’t anticipate materially lower long term interest rates to drive these sectors meaningfully higher.

“Some developed market central banks have now started their rate cutting cycle as inflation pressures fade, but the pace of easing will likely be more modest than expected a few months ago. Australia is proving an exception to this view, as inflation is looking more stuck than sticky, creating a bias for further tightening from the Reserve Bank,” said Mr Brown.

Domestically, he notes large caps have noticeably outperformed their mid and small peers, and financials have led as banks continued to defy valuation expectations.

“Laggards have included materials, energy and industrials companies,” he says.

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Jun Bei Liu

With only a few days left of the current ASX reporting season, it is clear that economic recession is now a declining tail risk that has been largely removed from the consensus vocabulary, and that peak uncertainty is in the rear vision mirror, according Jun Bei Liu, lead portfolio manager of the Tribeca Alpha Plus Fund.

While it can be hard to give up the ghost for those who are adamant that rate hike cycles result in recession, Ms Liu says the current reporting season illustrates that corporates are well placed to navigate further growth weakness.

“Interest rates are likely at peak, economic growth has remained resilient, inflation is falling, house prices have not collapsed, mortgage defaults have not become systemic, and the list goes on.

“Corporates remain cautious but fiscal 2024 is likely to be better than fiscal 2023.”

Ms Liu concedes there are pockets of weakness, but says this varies by industry and stock.

“There is a rolling slowdown underway, rather than an abrupt shock that has impacted all corporates at the same time and to the same degree.

“This is good for investors as it means there are pockets of strength – for instance in infrastructure, mining services and technology – to offset pockets of weakness – such as in consumer and cyclicals.

“Despite sells off in areas which have disappointed  – as we have seen with consumer staple companies Woolworths (ASX: WOW) and Dominos (ASX: DMP) – there is no loss of faith in the overall outlook as tends to happen when there is fears of capitulation.

“Instead, there appears to be a strong willingness to buy the equity market, including cyclical stocks, and to accept that even for areas where further weakness is expected, they can be purchased at the right price.

“This bodes well for the market and suggests that signs of further improvement will be greeted positively even if they come against a backdrop that remains a little uncertain.

“Certainly the mood of investors is more hopeful than fearful and, as witnessed in 2023, this is a very powerful mechanism to limit market downside and drive further strength.”

For investors, she says, the reporting season always brings challenges but equally it brings opportunities.

“Over the coming year we expect to see additional policy support for the Chinese economy, which should provide a stronger tailwind for selected commodity exposures, for short rates to begin falling which should help provide a floor for some rate sensitive areas that are not under structural pressures and for the cyclical outlook to begin to improve, once we are through a short and shallow slowdown.

“Relative valuations provide strong support for defensive growth areas like Healthcare and Technology vis-a-vis deep cyclicals, which are already priced for a rebound and leave little room for disappointment, but we do think that adding risk as more transparency on the timing and pace of policy support will be an enduring theme throughout 2024.

“We started the year with a stronger than consensus call to be positive on the equity market and it feels like we have already been rewarded with the market bouncing around all-time highs.

“The market will require lower rates and certainty that the earnings slowdown is bottoming out if it is to sustainably trade higher, but we think these drivers will come as the year progresses.

“We don’t think investors should be overly concerned by elevated volatility, which is now part and parcel of a world where economic and geopolitical risks remain high. We think pull-backs will be opportunities to buy rather than sell, as the market grinds its way higher,” Ms Liu says.

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Jun Bei Liu

The Tribeca Alpha Plus Fund has released its latest monthly report and market commentary. In it, lead portfolio manager Jun Bei Liu says: “What is now clear is that the immediate impact of COVID (for most sectors) is not as severe as initially feared, but the initial recovery enthusiasm has been muted by concerns of further lockdowns (e.g. Victoria) and the still-unknown longer-term economic & behavioural implications of the pandemic.

“The fact the market rallied in August despite net earnings downgrades to FY21 forecasts highlights the extent to which the market is willing to look-through near-term weakness. We continue to be on the lookout for businesses that are priced attractively on a ‘normalised earnings’ basis, provided the risk and time of achieving such normalised earnings is appropriately discounted in the price.

“Our view has always been that current market conditions offer ample opportunities to buy some premium assets which are trading at a fraction of their intrinsic value. Sydney Airport, Scentre Group and Ramsay Health Care are some of our favourites in playing the reopening theme.

“Investors are paying very little at this point for earnings, and we are comfortable that once the world returns to normal – and it will – these businesses will experience a V-shaped recovery regardless of the economic cycle. In fact, lower interest rates around the world will further underpin their traditional premium to the market.

“Meanwhile, after a brief disruption to sales due to forced store closures, most retailers have staged a phenomenal comeback, aided by the stimulus and changing consumption patterns. It would seem that saved overseas travel dollars are now being spent on housing renovation and discretionary items. While many would call this boost to sales temporary, and look to take profits accordingly, our view is that this is too early.

“In the retail space, rather than the staple names, we prefer the discretionary peers. Like most of our recommendations to investors, a positive top-down view should not be translated into a blanket buy of the whole sector. Fundamental research is the critical factor to generate superior returns. In this vein, Super Retail, which owns Supercheap Auto, BCF, Macpac and Rebel, operates in the sweet spot of this transition year.

“Without international travel, people are exercising more and travelling more to local camping grounds, with many local camping grounds now booked out for the Christmas break. Super Retail pointed to continuation of strong sales growth into the first half of 2020, up 32% across the group despite the lockdowns in Melbourne and Auckland and we do believe they are the key beneficiary of the current trends. What’s more attractive is that it is only trading at 14x earnings which is a substantial discount to ASX industrial earnings multiple of 22x.”

Read the report.

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Jun Bei Liu has assumed portfolio management responsibility for the Tribeca Alpha Plus Fund, effective Monday 8 April 2019.  Jun Bei has been co-portfolio manager of the fund since June 2018 and first joined Tribeca in 2005.

Her appointment follows the decision by Sean Fenton to step down from his portfolio management responsibilities.

Jun Bei is a talented and experienced investment professional with over eighteen years of experience, the last fourteen of which have been with Tribeca. She first joined Tribeca in 2005 as an analyst and was promoted to deputy portfolio manager of the Alpha Plus Fund in 2016.  In early 2018 she assumed co-portfolio management responsibilities for the Fund.

The Fund is one of Australia’s top performing equity long short strategies over the last thirteen years, combining a quantitative framework with a fundamental investment approach.  It will continue to be managed following the same investment process, with Jun Bei supported by Tribeca’s substantive in-house resources.

Sean has played an integral role in the growth and success of Tribeca over the last fourteen years. We are grateful for his significant contributions to the firm and wish him every success in his future endeavours.

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Ben Cleary

Tribeca Investment Partner’s Global Natural Resources Fund has been named one of Australia’s best funds of 2018.

The high-performing Tribeca Global Natural Resources Fund topped the Best Long/Short Equity Fund category in the Hedge Funds Rock & Alternative Investment Awards announced on 13 September.

The Tribeca Global Natural Resources Fund (the “Fund”) triumphed over two other finalists in the category:  the Antipodes Global Fund and the Regal Long/Short Australian Equity Fund.

The Fund, which has $500 million under management, is one of nine funds under the wing of Australian boutique fund manager Tribeca Investment Partners (Tribeca).

Tribeca Portfolio Manager Ben Cleary said he was honored by the win.

“This win shows that our investors and peers recognise the value of Tribeca’s investment philosophy and that the team has a well-considered strategy and a well-positioned, experienced team to execute it and generate solid returns for our investors,” he said.

The Tribeca Global Natural Resources Fund’s investment strategy aims to take advantage of volatility in the natural resources sector.

The Fund takes both long and short positions and invests along the value chain and through capital structures – equities, commodities and credit – to capitalise on relative value and valuation mispricing.

The Fund has delivered a cumulative net return of 233.75% and an average compound annual return of 57.21%, after fees, since it was established in October 2015.

The Hedge Funds Rock & Alternative Investment Awards recognise managers who perform whilst maintaining the objectives of the investment industry, including consistent, competitive risk-adjusted returns independent of the direction of financial markets.

Tribeca Investment Partners is currently undertaking a $250 million initial public offer (IPO) for its new listed investment company, Tribeca Global Natural Resources Ltd (the Company or LIC). The LIC’s investment strategy will be similar to that of the existing Tribeca Global Natural Resources Fund

The LIC aims to generate a compound annual return in excess of 15 per cent, after fees and expenses, whilst preserving capital over the long term (five years-plus).

The LIC is seeking to raise up to $250 million through an issue of 100 million new shares at $2.50 each, with potential for $50 million in oversubscriptions.

The LIC expects to start trading on the Australian Securities Exchange on 12 October.

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Ben Cleary

Australian boutique fund manager Tribeca Investment Partners (Tribeca) has opened its initial public offer (“IPO”) for a new listed investment company, Tribeca Global Natural Resources Ltd (the “Company” or “LIC”). The Company seeks to raise up to $250 million and aims to deliver investors a compound annual return in excess of 15 per cent.

The LIC intends to take advantage of the volatility in the natural resources sector by adopting a long/short strategy, investing along the value chain and through capital structures – equities, commodities and credit – to capitalise on the relative value and valuation mispricing.

“The natural resources sector is inherently volatile. Consequently, we believe there is an opportunity to deliver positive absolute returns over the long term using our active and global strategy, regardless of macro conditions,” said Ben Cleary, Portfolio Manager the Company.

“Central to our investment thesis is that the cyclical nature of the demand in natural resources means investors must be active. The high degree of volatility in the natural resources sector means some assets will be mispriced, which creates investment opportunities for investors who have the research capability and deep industry knowledge.”

The Company’s investment strategy will be similar to Tribeca’s existing Global Natural Resources Fund (Fund), which has delivered a cumulative net return of 233.75% since inception at an average compound annual return of 57.21% after fees since it was established in October 2015.

The LIC will invest across the natural resources value chain ranging from exploration and feasibility operations, mining projects, engineering and design businesses, transport and logistics, end-customers and service providers.

“We believe the ability and flexibility to invest both long and short, and across the capital structure of companies, while also being able to use direct commodity exposures to hedge our portfolio has been invaluable to deliver returns in both good and bad markets for the natural resources sector,” added Ben Cleary.

The Company seeks to generate a compound annual return in excess of 15 per cent after fees and expenses whilst preserving capital over the long term (five years-plus).

While the LIC has a global mandate, its initial focus will be on investments in North America, Europe and Asia-Pacific, including Australia.

It is proposed that the Company will list on the Australian Securities Exchange (ASX) under the code “TGF”.

Details of the IPO

The Company is offering up to 100 million new shares at $2.50 per share, to raise up to $250 million, with the ability to accept an additional 20 million shares, representing $50 million, in oversubscriptions. The minimum subscription is $100 million.

To participate in the IPO

The Offer is being made under a prospectus lodged with ASIC on 24 August 2018 (Prospectus) and is available on www.tribecaip.com/lic.

Applications under the general Offer can be made by completing the application form attached to the Prospectus or online through the application form accompanying the Prospectus. Applicants under the broker firm Offer should contact their broker for application details.

Lead Arranger to the Offer is Commonwealth Securities. The Joint Lead Managers are Commonwealth Securities, Morgans, Ord Minnett, Shaw and Partners, and Taylor Collison.

Proposed Key Dates

Offer Open -3 September 2018
Broker firm Offer close- 26 September 2018
General offer close – 26 September 2018
Expected ASX listing – 12 October 2018

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Cyclical indicators continue to improve in developed markets, particularly in Europe, but the US is also solid. The US Federal Reserve is leading the shift to tighter policy with several rate hikes and beginning communication around balance sheet reduction. The ECB is only now starting to shift its rhetoric. After a significant broadening of the economic recovery, the ECB has shifted from an easing bias and at some stage this year are likely to step away from negative rates and wind back bond purchases. Escalating political tensions around North Korea’s nuclear missile program and the impact of major hurricanes on the US have seen a rise in risk aversion and bond yields move back towards recent lows. These risks are very material, but at odds with improving economic data.

As economic growth has improved across China, the policy focus has shifted from growth stability to financial stability. Infrastructure spending and supply side reform are likely to remain key features of the Chinese economy although growth risks are more balanced. Fiscal stimulus to support economic growth is likely to remain, but the demand side for bulk commodities is capped. We see more upside in aluminium and alumina if production cuts take place and there is also more upside in base metals such as copper and nickel. The increasing adoption of electric vehicles is also driving demand for new energy materials.

Another aspect of China’s supply side reform and renewed focus on environmental policy is a rise in domestic inflation. Both the core producer price and consumer price indices are pushing higher and this is being reflected in the increased price of manufactured exports. This is also showing up in increasing US import prices. Globalisation and the shift of manufacturing to low cost China has been the most significant driver of lower inflation in advanced economies in recent decades. The end of this dynamic is at least as powerful as the less well defined impacts of technology and ageing demographics. Complacency around inflation is at an extreme and while we don’t expect a huge breakout, even a small shift higher could trigger a faster normalisation of excessively accommodative monetary policy by developed market central banks. This would obviously reinforce pressure on bond yields and favour a cyclical rotation.

The domestic growth outlook is deteriorating. There is stronger evidence that the housing cycle has peaked and this is likely to be reinforced by APRA’s efforts to rein in aggressive mortgage lending. A heavily indebted household sector that is experiencing flat to negative real income growth as well as dealing with higher energy and healthcare costs and has drawn down its savings rate is unlikely to fill the gap in growth. Further downside risk to the economy may emerge if the current tightening in mortgage lending standards pushes house prices lower and generates negative equity effects. How this plays out remains uncertain as interest rates are at record lows, preventing much corporate sector stress and the currency remains a viable source of adjustment. State governments are effectively recycling stamp duty revenue into road and rail infrastructure which also provides some offset to activity.

In terms of portfolio positioning, we continue to maintain an underweight to interest rate sensitive sectors as the Fed moves to a more hawkish stance and the ECB approaches QE tapering. We are comfortable with the US growth profile and maintain overweight positions to US cyclicals and the cyclical recovery in Europe and emerging markets is also now strengthening. We are positioned towards metals and new energy materials over bulk commodities within the resources sector. Domestically, we are positioned more defensively in gaming, select industrials and a small overweight to banks. We are increasing the underweight to building materials, developers and retail as the housing cycle rolls over.

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In his commentary on the outlook, Mr Fenton says:

• The domestic growth outlook is deteriorating. There is stronger evidence that the housing cycle has peaked and this is likely to be reinforced by APRA’s efforts to rein in aggressive mortgage lending.A heavily indebted household sector that is experiencing flat to negative real income growth and has drawn down its savings rate is unlikely to fill the gap in growth. Further downside risk to the economy may emerge if the current tightening in mortgage lending standards pushes house prices lower and generates negative equity effects. How this plays out remains uncertain as interest rates are at record lows, preventing much corporate sector stress and the currency remains a viable source of adjustment.
• In terms of portfolio positioning, we continue to maintain an underweight to interest rate sensitive sectors as the Fed moves to a more hawkish stance and the ECB approaches QE tapering.
• We are comfortable with the US growth profile and maintain overweight positions to US cyclicals and US$ exposed stocks and the cyclical recovery in Europe is also now strengthening.
• The resources sector momentum is fading and we have moved to a neutral position.
  Domestically, we are positioned more defensively in gaming, health, telecommunications and select industrials. We have moved underweight the banks in the wake of the new levy and with the likelihood of APRA further increasing capital requirements.

Read the full report.

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Ben Cleary

The Tribeca Global Natural Resources Fund has been ranked the number one performing hedge fund in all strategies globally in the 2017 Preqin Global Hedge Fund report*.

The fund is a long/short global natural resources fund focusing on large liquid opportunities in equities, credit and commodities. The fund’s investible universe includes hard rock commodities, energy, soft commodities and the service providers and infrastructure that wrap around these three groups.

Ben Cleary, co-portfolio manager, said 2017 is also looking to be a promising year for the fund.

“Despite a broad based selloff in global bonds, the Trump presidency and growing inflation expectations dominating markets in the fourth quarter, we remain net long the global natural resources sector,” Mr Cleary said.

“All three of these factors should be tailwinds for the sector in their own right in coming quarters and years.
“The first quarter of 2017 is likely to see year on year headline inflation globally in large part because we are cycling US$25 oil.

“Even if asset allocators don’t turn into outright sellers of bonds, higher inflation should force them to shorten the maturity of their portfolios by selling the back-end and buying the front end.

“History tells us that cyclical equities outperform when the back end yield increases,” he said.
Craig Evans, co-portfolio manager, said the Trump election saw the biggest sector dispersion moves in twenty years, resulting a large selloff in defensive yield equities in November.

“Expectations of fiscal stimulus drove a rotation into everything from investment banks to cement producers,” he said.

“While the potential going forward for US commodity consumption growth isn’t that exciting – with 1 per cent global copper consumption growth expected for every US$1tn of US fiscal stimulus – it is a different story globally.
“Should we see other G20 countries follow in President Trump’s footsteps – a particularly strong possibility with Japan – then in aggregate there could be significant consumption growth at a time when most commodities are already in market deficit thanks to years of under investment in new supply.

“From a positioning perspective, we are still comfortable that the materials sector is not a crowded trade.

“While finding value is undoubtedly harder following the rally in 2016, we remain long the natural resources sector but have reduced our net exposure to the lowest level in the past 12 months.”

The Tribeca Global Natural Resources fund is approaching a level to soft close. Both Cleary and Evans are investors in the fund and have committed to re-investing 100% of all performance fees paid, back into the fund for the next five years.

The Tribeca group manages assets of well over A$2 billion overall, with more than A$1 billion invested in hedge fund strategies.

* 2017 Preqin Global Hedge Fund Report 

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