Page 34 - April Report2022

April Report 2022
Investment/Finance Committee meeting minutes (3)
3. Winners and Loser – As illustrated in Table 3 JSF has had other winners in addition to Private Capital. Adage, JSF’s largest single manager investment at $52 million continues to deliver above average performance as does Overlook. Gaoling outperformed a very weak Chinese market. Mangrove enjoyed a spectacular recovery in 2021 after several years of very poor performance. JSF liquidated 75% of its Mangrove investment (i.e. $2.7 mill) at the 2021 year end. The proceeds are being reinvested in Junto, a much lower risk hedge fund
.
Losers include Coronation, an emerging market manager, which Prime and the Committee still have confidence in although the changing situation in China and Russia raise new questions about emerging market investments. Prime is reviewing its position on Coronation. Orbi-Med (a biotechnology manager) was a spectacular loser. Fortunately, JSF cut its Orbi-Med weighting in half earlier in 2021 and also is reducing its Cat Rock investment. Proceeds from the sale of these two investments plus Mangrove are being used to fund the investment in Junto Offshore. Davidson, Farallon and Diameter (and Junto) are all lower risk, high quality hedge fund managers who are expected to underperform their benchmarks in bull markets, which they did in 2021. Prime expects these four managers will generate strong relative performance during the current market sell off, which they are.
Table 3
Winners/Losers
Total Return Performance in Calendar 2021
Adage ($52.2m)
Overlook ($6.5m)
Gaoling ($2.3m)
Mangrove ($2.7m)
Winners
Return
30.4%
6.4%
-16.4%
80.6%
Benchmark
28.7%
-8.2%
-21.6% 10.3%
Losers
Return
Coronation ($5.3m) -14.3%
OrbiMed ($2.0m) -43.8%
Cat Rock ($3.6m) -0.1%
Benchmark
-2.5%
-20.4%
11.7%
Priv. Cap. ($68.0m)
44.9%
27.0%
Davidson, Farallon, Diameter ($20.7m)
7.1%
13.5%
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The Committee continues to believe a meaningful investment in lower risk hedge funds makes sense from a defensive standpoint. The extra return earned from hedge funds versus bonds appears to more than justify the moderate risk and transparency penalty associated with these investments.