In January the BlackPearl Masters Fund finished lower by 0.74%. Generally speaking, most of the fund’s strategies performed well with 6 of our 9 strategies finishing in positive territory for the month. However, the outbreak of the Coronavirus impacted two of our strategies that had significant exposure to resources and more specifically to oil explorers and oil producers. While some of these stocks now appear to be cheap and present outstanding buying opportunities at current prices, we plan to take a cautious stance to the sector until we can get some more clarity on the situation.
Strategies that performed well during the month were ones that were exposed to offshore earning companies, large technology multinationals and local small and midcap stocks. Our long short value strategy did well by benefiting from positions is Visa, Alphabet and Swedish Match. While companies in the information technology and energy sectors added positively to the short book performance. Our long short macro strategy also benefited from overseas position including Alphabet, Microsoft and Amazon while at the same time short position ins Tesla and Uber detracted slightly.
It was pleasing to see our new long short small and midcap strategy having a strong month with the strategy generating strong alpha in the short book while also generating strong returns on long positions primarily driven by its top 5 holdings. We expect we will be increasing our exposure to this strategy over the next few months though we would prefer to do so on any dips.
The fund’s market neutral strategy also had a positive month with all the positive performance coming from long potions even though the strategy benefited from a number of shorts including a short in electronics retailer Kogan.com. Kogan stock fell 32% in January after announcing a weak sales update.
February is earnings season in Australia and our managers are out visiting company management to try to get a better understating of fund holding company performance and their prospects going forward. We have already seen big moves with stock prices responding to earnings announcement and believe this volatility should provide good opportunities on the both the long and short side for the fund.