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Alyangka Francheska Manalo
Alyangka Francheska Manalo
Articles (30) 

Gondor Capital Produces Double-Digit Returns in First Half of 2017 on the Back of Fed Concerns

The hedge fund consistently outperforms the S&P 500

July 26, 2017

New York-based hedge fund Gondor Capital Management’s two funds again edged their benchmarks with double-digit returns in the first half of 2017, consistently outperforming the S&P 500.

Gondor’s domestic hedge fund, Gondor Partners LP, jumped 11.90% through June (up 2.02% for the month), while the offshore Gondor Partners Ltd. finished the first six months of the year up 10.36% (up 1.68% for the month). Comparatively, the S&P 500 rose 9.34% in the first half of the year while the HFRX index was up 3.73% during the same period.

“The strategy I use is non-correlated to the market,” Vincent Au, portfolio manager of Gondor Capital, said. “If you review the performances of my funds, there were months that the S&P 500 was down and Gondor was up. That is the ‘value’ my funds bring to the table.”

He emphasized Gondor has been consistently delivering solid returns for the past 22 months, compared to just eight months across the global hedge fund space. Gondor Partners Ltd. closed 2016 up 26.85% while Gondor Partners LP gained 26.53%.

He also boasts of his strength in understanding the market movements due to his experience in financial management as well as his focus on research that enables him to deliver reliable returns to his investors.

“Ultimately, the returns are generated by the holdings of the funds which are, in turn, based on my experience and research,” Au said.

Commenting on his funds’ dependable performances for nearly two years and outperformance compared to their benchmarks, Au said he remains confident the strategy and selection of investments in his funds would continue to perform.

“I am as confident as ever in the strategy I employ to manage the funds,” Au said.

He added, “I recognize that while my returns are compared to the indexes, it is also compared against other hedge funds. However, I manage the fund on an absolute basis of risk, return and to the best interest of the limited partners. My goal when managing the fund is not focused on beating the indexes and other hedge funds. I am confident that as long I apply the principals of my strategy and remain focused as well as disciplined, the returns will be good.”

Fed interest rate is cause for concern

The U.S. Federal Reserve raised interest rates in June as it pushes for the normalization of interest rate policy. This is the second this time year the Fed has raised the rate, bringing it to 1.25% from the previous 1%.

Despite the hike, the Fed remains confident the U.S. economy is recovering and added that it “continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further.”

But Au said interest rates continue to be a concern because as they increase, investors decrease equities in their asset allocation and raise their bond holdings. Interest rate hikes also strengthen the U.S. dollar, making American goods more expensive.

In the meantime, Au said he is always concerned about his holdings and the markets.

“It is my job to worry,” he said.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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