Asian Hedge Fund Manager, Long Short Equity, Macro

David Mudd

Cross Asset Strategy

<ul>
<li>The S&amp;P is declining toward its initial support level of 4800 - 5000. The dollar continues to decline defying its normal status as a safe haven. </li>
<li>The high co-dependence of the US economy and stock market ensures that an economic recession follows the market decline.</li>
<li>As tariff negotiations with individual countries begin, there will be continued headline risk and volatility.  However, the bear market has reached the point of no return for the foreseeable future.</li>
</ul>


The S&amp;P is declining toward its initial support level of 4800 - 5000. The dollar continues to decline defying its normal status as a safe haven. 
The high co-dependence of the US economy and stock market ensures that an economic recession follows the market decline.
As tariff negotiations with individual countries begin, there will be continued headline risk and volatility.  However, the bear market has reached the point of no return for the foreseeable future.


From Liberation to Obliteration - THE POINT OF NO RETURN

<ul>
<li>The initial target range for the S&amp;P in the US bear market is 4800 to 5000. This level also coincides with the technical level of -20% from the top.</li>
<li>The stock market and economy in the US are highly co-dependent, and the bear market will cause consumption to fall more than in previous market downturns.</li>
<li>Foreign investors have started to reduce their overweight US allocations quickly.  Retiree "Sequence of Returns Risk" will add to selling pressure in the US market.</li>
</ul>


The initial target range for the S&amp;P in the US bear market is 4800 to 5000. This level also coincides with the technical level of -20% from the top.
The stock market and economy in the US are highly co-dependent, and the bear market will cause consumption to fall more than in previous market downturns.
Foreign investors have started to reduce their overweight US allocations quickly.  Retiree "Sequence of Returns Risk" will add to selling pressure in the US market.


Macroeconomics

<ul>
<li>Liberation Day marks the beginning of the Tariffication of the global trading system.  The complex web of supply chains will be forced to detangle itself to find cost efficiencies.</li>
<li>US companies will try to unpack the many complexities of re-sourcing products to mitigate the inflationary effects of tariffs.  Domestic substitution is not a possibility in the near-term.</li>
<li>US consumers will begin to see inflationary impacts of Tariffication in the coming weeks.  China announced retaliatory measures that would open the door for other countries to do the same.</li>
</ul>


Liberation Day marks the beginning of the Tariffication of the global trading system.  The complex web of supply chains will be forced to detangle itself to find cost efficiencies.
US companies will try to unpack the many complexities of re-sourcing products to mitigate the inflationary effects of tariffs.  Domestic substitution is not a possibility in the near-term.
US consumers will begin to see inflationary impacts of Tariffication in the coming weeks.  China announced retaliatory measures that would open the door for other countries to do the same.


TRUMP'S TARIFFICATION: The Market's Willful Ignorance

Equity Bottom-Up

WH Group Limited operates as a holdings company. The Company, through its subsidiaries, provides meat processing services, supplies chilled meat, meat products, and other related products.

<ul>
<li>The Hong Kong Alpha simulated portfolio returned 0.97% in March outperforming its benchmark by 1.1%.  Since inception the portfolio has outperformed Hong Kong indexes by 8% to 11%.</li>
<li>The portfolio has generated alpha while maintaining a correlation of 0.8 and a beta of 1.05.  The HK Alpha portfolio has a Sharpe ratio of 2.19 YTD.</li>
<li>On 3/31/25 we sold <a href="https://www.smartkarma.com/entities/shanghai-electric-group-company-limited-d542164d-4d5a-4ce0-b33e-5fe6bc34722c" target="_blank" data-smartkarma-citation="entities:8777:1" rel="noopener">Shanghai Electric Group Company (2727 HK)</a> , <a href="https://www.smartkarma.com/entities/citic-securities-h" target="_blank" data-smartkarma-citation="entities:463:1" rel="noopener">Citic Securities (H) (6030 HK)</a> , <a href="https://www.smartkarma.com/entities/sands-china-ltd" target="_blank" data-smartkarma-citation="entities:182:1" rel="noopener">Sands China (1928 HK)</a> , and <a href="https://www.smartkarma.com/entities/sunny-optical-technology-group" target="_blank" data-smartkarma-citation="entities:13363:1" rel="noopener">Sunny Optical Technology Group (2382 HK)</a></li>
</ul>


The Hong Kong Alpha simulated portfolio returned 0.97% in March outperforming its benchmark by 1.1%.  Since inception the portfolio has outperformed Hong Kong indexes by 8% to 11%.
The portfolio has generated alpha while maintaining a correlation of 0.8 and a beta of 1.05.  The HK Alpha portfolio has a Sharpe ratio of 2.19 YTD.
On 3/31/25 we sold Shanghai Electric Group Company (2727 HK) , Citic Securities (H) (6030 HK) , Sands China (1928 HK) , and Sunny Optical Technology Group (2382 HK)


<ul>
<li>On January 1st, we created the Asian Alpha Hedge Fund (AAHF), which returned 31.66% in the first quarter of 2025. AAHF is a simulated (paper-traded) long/short equity Asian hedge fund.</li>
<li>The fund's outperformance was attributed to high alpha generation and country allocation/positioning.  The portfolio gained from its long positions in Hong Kong and shorts in Japan.</li>
<li>On 3/31/25, we reduced long positions in HK tech and covered short positions in Japanese steel companies. At 3/31/25 AAHF had a gross position of 172% and net exposure +5.89%. </li>
</ul>


On January 1st, we created the Asian Alpha Hedge Fund (AAHF), which returned 31.66% in the first quarter of 2025. AAHF is a simulated (paper-traded) long/short equity Asian hedge fund.
The fund's outperformance was attributed to high alpha generation and country allocation/positioning.  The portfolio gained from its long positions in Hong Kong and shorts in Japan.
On 3/31/25, we reduced long positions in HK tech and covered short positions in Japanese steel companies. At 3/31/25 AAHF had a gross position of 172% and net exposure +5.89%. 


Asian Alpha Hedge Fund (AAHF): INTRODUCTION

Asian Hedge Fund manager based in HK/SG with over 20 years of experience managing Asian Long/Short Equity funds. Macroeconomic top-down analysis generates thematic investments that are further researched from the bottom-up. Research is supplemented with advanced technical analysis. 
Previous experience includes M&A with Morgan Stanley and CPA with Deloitte in NYC. Wharton MBA.