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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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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Ben Cleary

The top performing hedge fund in Australia*, the Tribeca Global Natural Resources Fund, has delivered a return of 113% percent for the calendar year to date (net), based on a concentrated and active strategy in global natural resources.

The fund is a long/short global natural resources fund focusing on large liquid opportunities in equities, credit and commodities. It takes the view that the inherent volatility in the natural resources sector rewards an active approach, while the cyclical nature of the sector benefits from a long/short strategy.

Co-portfolio manager Ben Cleary said that some of the best months for the fund during the year have been during general drawdown months.

“During January and June, for instance, we were up 17 percent and 17 percent respectively, which goes against the market trend.

“The majority of our returns in 2016 have come from the precious metals, energy, soft commodities and specialty sectors, with the largest geographic contributors being North America and Australia.

“Looking ahead, we see a number of interesting market structure issues in the natural resources sector. Generally speaking, most major commodity producers remain heavily indebted, having overinvested at the top of the market, and they are not able to take advantage of what appears to be a bottoming of the sector. This is an ideal backdrop for a long/short manager to take advantage of capital raisings, mispriced assets and cheap volatility.”

Craig Evans, co-portfolio manager, said that the natural resources sector is inherently volatile which creates a persistent opportunity to deliver positive absolute returns regardless of macro conditions.

“By using a low net, low gross, concentrated and active strategy, we believe you can generate returns without the use of leverage, and by utilising cash as the best hedge.

“In the lead up to market events where we have no edge – for instance, the Brexit vote – we generally build cash, which leaves us in a good position to put money to work and buy natural resource stocks that had been sold off but that clearly would not be impacted by goings-on in the UK.

“It is volatility that creates opportunity and when that volatility strikes, you want to be able to go long and short to capture it.”

Mr Evans added that the hedge fund industry has evolved significantly in recent years, with increasing investor interest in hedge fund strategies.

“While it has taken some time for investors to truly embrace hedge funds, particularly Australian investors, we sense a change in the air.

“There has been a great deal of work within the industry to educate investors about the inherent risks in some portfolios, and that they need to protect themselves from the dire situation when both equities and bonds are down.

“Investors need something in their portfolios that provides them with absolute returns after fees, something uncorrelated and that provides some protection when they need it.”

Tribeca recently launched a Cayman vehicle for the Tribeca Global Natural Resources Fund to meet the growing demand from international investors.

Mr Cleary said that this demand is proof that Australian based hedge fund managers can compete on a global stage and hold their own.

Tribeca manages assets of $2.4 billion overall, with close to $1 billion invested in hedge fund strategies.

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* http://www.preqin.com/docs/reports/Preqin-Insight-Alternative-Assets-in-Australia-October-2016.pdf

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Ben Cleary

Tribeca Investment Partners has launched a Cayman vehicle for the Tribeca Global Natural Resources Fund to meet the demand from international investors.

Ben Cleary, co-portfolio manager of the fund, said: “This demand is proof that Australian based hedge fund managers can compete on a global stage and hold their own.

“International investors are coming to Australia to find talented fund managers who have a different perspective.”

The Tribeca Global Natural Resources Fund is a Global Long Short Natural Resources strategy that uses fundamental research to analyse commodities and equities. Predominantly focused on large capitalisation and liquid equities, it can also invest in other asset classes to hedge and enhance returns. The Fund runs low net exposures and aims to generate superior risk adjusted returns while seeking limited correlation to equity markets.

The AUD denominated unit trust was launched on 31 October 2015 and has been targeting family offices and high net worth investors.

“The decision was made to launch a Cayman vehicle due to the high levels of demand coming from international investors, in particular Asian family offices,” Mr Cleary said.

“There is inherent volatility in the resources sector that provides a huge amount of opportunity for investors.

“Australian based fund managers have a clear advantage in the resources sector and being in the Asian time zone is an advantage,” he said.

Tribeca manages assets of $2.4 billion overall, with close to a billion invested in hedge fund strategies.

The move to launch a vehicle for international investors follows recent growth in the team, with Craig Evans appointed to the newly created role of co-portfolio manager for the fund in May this year.

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