MAXIN GLOBAL FUND - USD is a Long / Short Directional hedge Fund incorporated in Luxembourg. It started trading on February,22 2022 and replaces MAXIN ADVISORS' MODEL PORTFOLIO which has been trading since January 1st 2014. At MAXIN ADVISORS, we manage FULLY TRANSPARENTLY and publish the transactions on a DAILY basis and the details of the portfolio on a WEEKLY basis.
MAXIN GLOBAL FUND / MODEL PORTFOLIO
Gross Performances
– 1.60 % Last Week
– 4.94 % Month to Date
+ 1020.47 % Since Inception Jan 1st, 2014
+ 30.48 % Per Annum CAGR 9.1 Years
NAV 1120.47
MAXIN GLOBAL FUND – USD
Net Performance
– 4.94 % Month to Date
+ 34.14 % Since Inception 22 feb 22
+ 37.77 % Annualised CAGR 11 Months
Estimated NAV USD 1334.14 134.14 ( Base 100 )
Managers’ Comments
At MAXIN ADVISORS, we are value driven investors by essence.
Our management process is directional, going long cheap assets and shorting overvalued assets, based on in-depth fundamental research on both macro and micro levels.
As a result, when the markets become irrational and investors disconnect from the fundamentals, our portfolio tends to suffer temporarily. This happened during the mania of 2020, our only negative year in 9 years of bull and bear phases, it happened again in the fall of 2022 with then irrational sell-off of Chinese assets in October and it happened again this month with the spectacular sentiment squeeze that pushed European equities to near all-time highs and the strong rebound in overvalued technology stocks..
But it has never prevented us form delivering strong positive performances ultimately as irrational excesses end-up reversing themselves as sharply as they developed.
January was complicated to trade on many fronts and we end the month down -4.94 % Net.
That is still a +34.14 % net increase over the past 11 months and a +37.77 % annualised CAGR per annum, a significant outperformance when compared to the -7.4 % decline in the SP500.
Chinese equities kept rising as investors are coming back en masse to the recently unloved Middle Kingdom’s equities. Unfortunately, they are now overextended and even if we remain structurally bullish for the future, the likelihood of a circa 10 % correction ahead is growing significantly. From a highly overweighted posture in October 2022, we took our profits regularly inJanuary, reducing our exposure to 20 % of our portfolio today.
In Europe, the January leg up started from already overvalued and overextended levels and the main indexes are trading very near their previous all-time highs as if the war in Ukraine, inflation at 10 % and major social protests are rocking the old continent never happened. Valuations are high across the board despite worrying macro trends, and the almost certainty of higher rates both at the short and long end ahead.
Within European equities, some sectors such as Luxury groups, consumer goods and insurance are trading at valuation levels that anticipate a continuation of the exceptional years of the past whilst the underlying trends have already started to peak. Europe is plunging into a major real estate crisis with significant implications in terms of distressed debt and economic downward pressure through the negative wealth effect. Inflation remains high, and even climbing again in peripheral markets, workers demand wage increases and interest rates are still way too low to contain inflationary pressures.
Furthermore, rising rates are now starting to take a significant toll on public finances and Governments and spending hand over fist to try to contain the impact of rising prices on the less privileged, sewing the seeds of a major debt crisis in the years to come.
During the month, we took profits on our long European positions and built our strategic short exposure gradually.
The US was even more complicated to trade as we entered the earnings reporting season, and as expected, it turned out to be sharply negative in absolute terms. In fact, beyond the decline in net profits in almost every sector, the most negative part was the wave of brutal layoffs and the sharp downgrade in the future outlook projected by CEOs, people who do not trade markets daily, but implement long term strategies and manage industrial cycles. When they see downturns such as the 28 % year-on-year collapse in global PC sales in December or a sharp decline in the rate of growth of cloud computing for example, they know full well that their underlying business conditions will not improve materially in the coming months, hence the drastic moves to layoff staff on a scale unprecedented in their own history.
But investors could not care less, totally polarised on their hopes for a quick pivot following a decline in inflation that we projected as early as October 2022. They have also discounted the negative earnings, focusing on the beat over sharply downgraded estimates and, more importantly, they are of the view that there will be only a short lived and shallow downturn ahead and that corporate earnings will start rising as early as next year.
Sentiment has shifted from the extreme of pessimism of the 4th quarter of 2022 to renewed speculative excesses as testified by the 75 % rally in TESLA in less than a month, or the sharp rebound in Microsoft share price in the face of its worst earnings decline of the past decade and the strong warnings of its CEO.
Technically, trading the market in January was even more complicated as most stocks and the main indexes were still very much in their downtrends up until the last week of the month, warranting disciplined investors to stay short for as long as the downtrend was not broken.
At turning points and trend breakouts, reversing exposure has a cost and it is not surprise if our worst week in January was the last week. However, we actually added to our short positions in the most extreme moves such as semi conductors or TESLA that we have been trading successfully, taking our profits all the way down to 101.5 and using the sharp rebound to rebuild our short position 20, 30 and 70 % higher.
From a tactical standpoint, we still expect the markets to turn into February. We expect Central Banks to deliver a sharply hawkish message to the markets to quash the irrational optimism of investors, as they have done in April and August of 2022.
Bear markets always see sharp rebounds but they do not last and this bear market is not over. We see lower equities in February, a rebound in March April to, at best 4’300 on the SP500, before we enter the second leg of the secular bear market into the summer and the 4th quarter as the negative macro dynamics unfold.
January was also negative for us as the crypto sphere did one of its dead cat bounce in line with the general risk-on mode of the markets and volatility collapsed to levels that are, to us, the best sign that we are ending the Q4 bear market rally very soon. Those two components impacted our performance in January but we took advantage of their sharp moves to increase our strategic positions in the space.
Finally, we have increased our shorts in EUR and GBP as we expect the US currency to mark a significant bottom any time soon, impacting negatively precious metals where we have turned negative tactically.
In bonds, we took profits in a timely manner on our long positions in US Government bonds and corporate bonds and initiated a new short position in German Government bonds as we expect some damage to come there.
All being told, considering the sharp and irrational rally in equities in January with the Nasdaq adding 11 %, Europe higher by 10 %, cryptos rising by 20 % and volatility collapsing by the same, our – 5 % downdraft in January to date is a small price to pay for our strategic positioning and our Chinese long exposure cushioned the move as did our active trading of positions in Japan, Emerging Markets and US stocks.
Could we have done better ? Surely ! It can always be better but we are consistent in our management process and the volatility of our portfolio is actually much lower than the volatility of the underlying markets themselves
Risk Metrics and Performance Attribution
Portfolio Details
Asset Allocation
Transaction List
January 28 2023
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