Top Asian Hedge Fund Manager Hard Closes
"Everything comes to him who hustles while he waits."
Thomas A. Edison
John Zwanstra's firm, whose Penta hedge fund firm, tipped the AUM scales as at the end of October 2007 at a staggering US$4.8 billion is about to hard close. Interestingly this veteran who made his name a number of years ago trading Japan essentially worked out (along with Joho) that relying on Japan alone would not be sufficient as a reliable alpha source looking forward. The result - Zwanstra opted to broaden the geographical investment focus to include other countries in Asia.
Today, Zwanstra manages 3 hedge funds in addition to managed accounts. Penta Asia Ltd. (the offshore vehicle which was originally called the Penta Japan Long/Short Fund Ltd.) comprises US$2.2 billion while the Penta Asia Domestic Partners LP (the onshore vehicle) comprises US$1.0 billion; and finally, what he describes as his "market neutral" strategy called Penta Asia Long/Short Ltd. which manages US$1.2 billion.
Zwanstra has made a name for himself by navigating volatile markets and producing volatile returns. His recent positive success has been jaw dropping and certainly vaults him into this author's personal Hedge Fund League of Asia's Super-Producers. If one counts the time when Zwanstra's Penta was more Japan (small-cap focused) on a net-of-fee basis his returns by year for the Penta Asia Fund Ltd has been as follows: 1998, 15.80%; 1999, 153.76%; 2000, -48.25%; 2001, 1.35%; 2002, 3.58%; 2003, 109.99%; 2004, 2.73%; 2005, -18.78%; 2006, 185.32%; and, so far on a calendar year basis through 2007 (Oct end) 122.87%. Not bad at all!
Posting numbers like these in 2007 has been possible by tiliting the portfolio very heavily towards Hong Kong and Chinese stocks on the long side (approximately 75% of the long book) and holding a majority of shorts in Japan (35% of the short book).
Another interesting insight into the super-normal profits generated has been the fact that on the long side the bigget exposure has come from exposure to the real estate sector. This may be through equities and most probably through real estate hard assets. This reflects a growing global hedge fund trend. In the case of China, the real estate market continues to be on fire driven by excessive liquidity in the financial system. A perfect case in point has been Macau.
It comes as no surprise that in early 2008 Zwanstra plans to hard close the fund to investors. That is good news for existing investors. Presumably he is generateing a nice living in fees and not really interested in building out a larger, bank-like firm a la Ken Griffin's Citadel.
Other hedge fund managers in the region - especially those with a currently exclusive Japan-equity focus would be wise to take a leaf out of the Penta book and consider a broader geographical focus where alpha seems to be more available. That would seem to be a logical answer to the disappointing alpha performance in the land of the rising sun. Mahalo.
"Everything comes to him who hustles while he waits."
Thomas A. Edison
John Zwanstra's firm, whose Penta hedge fund firm, tipped the AUM scales as at the end of October 2007 at a staggering US$4.8 billion is about to hard close. Interestingly this veteran who made his name a number of years ago trading Japan essentially worked out (along with Joho) that relying on Japan alone would not be sufficient as a reliable alpha source looking forward. The result - Zwanstra opted to broaden the geographical investment focus to include other countries in Asia.
Today, Zwanstra manages 3 hedge funds in addition to managed accounts. Penta Asia Ltd. (the offshore vehicle which was originally called the Penta Japan Long/Short Fund Ltd.) comprises US$2.2 billion while the Penta Asia Domestic Partners LP (the onshore vehicle) comprises US$1.0 billion; and finally, what he describes as his "market neutral" strategy called Penta Asia Long/Short Ltd. which manages US$1.2 billion.
Zwanstra has made a name for himself by navigating volatile markets and producing volatile returns. His recent positive success has been jaw dropping and certainly vaults him into this author's personal Hedge Fund League of Asia's Super-Producers. If one counts the time when Zwanstra's Penta was more Japan (small-cap focused) on a net-of-fee basis his returns by year for the Penta Asia Fund Ltd has been as follows: 1998, 15.80%; 1999, 153.76%; 2000, -48.25%; 2001, 1.35%; 2002, 3.58%; 2003, 109.99%; 2004, 2.73%; 2005, -18.78%; 2006, 185.32%; and, so far on a calendar year basis through 2007 (Oct end) 122.87%. Not bad at all!
Posting numbers like these in 2007 has been possible by tiliting the portfolio very heavily towards Hong Kong and Chinese stocks on the long side (approximately 75% of the long book) and holding a majority of shorts in Japan (35% of the short book).
Another interesting insight into the super-normal profits generated has been the fact that on the long side the bigget exposure has come from exposure to the real estate sector. This may be through equities and most probably through real estate hard assets. This reflects a growing global hedge fund trend. In the case of China, the real estate market continues to be on fire driven by excessive liquidity in the financial system. A perfect case in point has been Macau.
It comes as no surprise that in early 2008 Zwanstra plans to hard close the fund to investors. That is good news for existing investors. Presumably he is generateing a nice living in fees and not really interested in building out a larger, bank-like firm a la Ken Griffin's Citadel.
Other hedge fund managers in the region - especially those with a currently exclusive Japan-equity focus would be wise to take a leaf out of the Penta book and consider a broader geographical focus where alpha seems to be more available. That would seem to be a logical answer to the disappointing alpha performance in the land of the rising sun. Mahalo.
posted by Franklin Scruggins | 10:03 AM
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