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Bullishness Hurts Sloane Robinson

Markets Pull Down Large UK Hedge Fund

The global markets just ended one of their worst quarters in years. And one hedge fund firm that has been hurt more than most others is London-based giant Sloane Robinson.

Through mid-June, the SR Global International fund was down about 15 percent after dropping nearly 11 percent in May alone. SR Global Japan was off 11.4 percent, SR Global Emerging Markets fund was down about 8 percent after dropping more than 9 percent in May alone and SR Phioenicia was down 10 percent.

Investors say Sloane Robinson was hurt because it has been mostly net long for most of the year. Indeed, in its report summing up its lousy May performance, the firm told clients in their monthly letter: “We underestimated the impact of the evolving euro crisis on the global economy.”

It did indicate that it was pulling back on its bullishness, telling investors portfolio exposure has been reduced substantially and it continued to sell after the month end.

In the May report, the firm also told investors that it felt from a bottom-up analysis that earnings and the recovery appear well on track. It also said there were increasingly several areas of low valuation in Europe compared to long term histories. However, it did concede these encouraging signs were not helping in determining short term share price performance.

The upshot: The International portfolio, for example, was down another two percentage points from June 1 through June 16. Emerging Markets also slipped some more.

So, it will be interesting to see the final June numbers when they make the rounds in a few days.

Hugh Sloane and George Robinson co-founded the firm in 1993. Richard Chenevix-Trench, who joined Sloane Robinson in 1995, has been CIO since 2000 and is the manager of the Emerging Markets and Asian portfolios.

At the beginning of 2010, Sloane Robinson had a little more than $8 billion under management. But, this was nearly half the $15 billion it managed at the end of 2007.

All of its funds lost money in 2008, and several were down between 24 percent and 44 percent. However, most of them came roaring back in 2009, rising between 30 percent and 40 percent.

Robinson graduated from Oxford University with a degree in Engineering Science. Between 1979 and 1985, he worked for John Swire & Sons in Hong Kong, the UK, Philippines and Korea. In 1985 he joined WI Carr and eventually moved to Hong Kong as regional director of research.

Sloane holds a degree in Economics and Politics from Bristol University & an MPhil in Economics from Oxford University. He joined GT Management in 1979, working initially in Hong Kong as an economist for the Asian region. In 1986 he became investment director of GT Japan, responsible for Japanese equity portfolio’s, and chaired the Asian regional investment committee. In 1991 he moved to London to become GT’s CIO for Europe.

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