Dear Friends and Colleagues:

We are excited to report “top of class” Multi-Strategy Hedge Fund results for 1H 2019.

Our view of global multi-asset markets proved to be prescient through the first half of the year and we successfully capitalized on the theses discussed in Q1 2019 (Blog, Newsletter). The return attribution was diversified through a variety of low correlation allocations in an effort to decrease volatility and increase risk adjusted return.

Our most notable wins included:

  • Regulated Crypto Products (including an over 10x return in a particular Bitcoin Derivative position)
  • Financial sector bounce back (lead by BX, which returned over 50% in 1H 2019)
  • Honorable mentions to: Value, Short, Commodities and the Cronyism bucket, for all positively contributing to YTD returns
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Given the dovish pivot from the Fed Reserve President, Jerome Powell, which all but promised a rate cut at the end of July — financial markets continue to look somewhat supported and healthy. Although, as earnings season gets under way, there seems to be a moderate likelihood that the market is set to pull back as fiscal stimulus from last years tax break wears down, and central bank easing effects are bound to disappoint.
We are choosing to keep most of our positions on “tight leashes” as the business cycle stretches thinner. While we ended the 1H with more of a risk on style of positioning, we continue to lower portfolio risk and increase our cash position, while also adding hedges and more short positions. Geopolitical insights are at the forefront of our investment decision making process as we continue to evaluate investment opportunities across assets.

There was plenty of noise and intense volatility this past week in crypto with the leading executive in charge of Facebook’s Libra project in front of congress. The only *signal* in our view was when Steve Mnuchin, Secretary of Treasury and Goldman Sachs Partner drew an extremely clear line between cryptocurrency speculation and dark market illicit cryptocurrency use. As would be expected from one of the quickest to fly through the ranks at Goldman Sachs and be named a Partner — Mnuchin sided with speculators and made clear that so will the regulators. He further stated that individuals using these assets for illicit purposes will be prosecuted to the maximum extent. In our view this was a solid bullish signal as the cryptos begin their march towards regulated global adoption. However, as usual with most assets, short term price action is highly unpredictable.

Due to the immense YTD out-performance in our “regulated crypto” tactical allocation which was primarily built using derivatives — we have been forced to take some profits off the table in favor of more stable assets. With the 2018 Opportunity Zone tax credit beginning to take full form, and a sitting president 100% intent on maximizing the value of his multi billion dollar real estate empire — we view global commercial real estate and real estate investment trusts with stable yields to be attractive in the current environment even though they may face a downturn due to their cyclical nature.

We are currently evaluating mostly private side deals — both startups and real estate, in an effort to further diversify the portfolio return amongst low correlation assets. Further, after this “top tier” 1H 2019, now is as good of a time as ever to begin focusing more effort on the business development side of this operation.

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THIS IS AN EXCERPT FROM THE 1H 2019 OVERVIEW which was published on 18-Jul-2019, please reach out to info@otium.tech if you would like to view full materials (for qualified accredited investors only)

DISCLAIMER
The information contained herein is highly confidential and is being provided to you at your request for informational purposes only and is not, and may not be relied on in any manner as, legal, tax or investment advice or as an offer to sell or a solicitation of an offer to buy an interest in any investment vehicle to be formed (the “Fund”). A private offering of interests in the Fund will only be made pursuant to a definitive offering agreement, including the Fund’s partnership agreement and subscription documents, which will be furnished to qualified investors on a confidential basis at their request for their consideration in connection with such offering. The information contained herein will be superseded by, and is qualified in its entirety by reference to such documents. The information contained herein must be kept strictly confidential and may not be reproduced or redistributed in any format without the express written approval of the Fund. Certain information contained herein (including financial information and information relating to investments) has been obtained from published and non-published sources.

Such information has not been independently verified by the Fund. Except where otherwise indicated herein, the information provided herein is based on matters as they exist as of the date of preparation and not as of any future date, and will not be updated or otherwise revised to reflect information that subsequently becomes available, or circumstances existing or changes occurring after the date hereof. In considering any performance data contained herein, you should bear in mind that past performance is not indicative of future results. Certain information contained herein constitutes forward-looking statements, which can be identified by the use of terms such as “may”, “will”, “should”, “expect”, “anticipate”, “project”, “estimate”, “intend”, “continue” or “believe” (or the negatives thereof) or other variations thereof. Due to various risks and uncertainties, including those discussed above, actual events or results or actual performance of the Fund may differ materially from those reflected or contemplated in such forward-looking statements. As a result, investors should not rely on such forward-looking statements in making their investment decisions.

Investing in alternative investment vehicles and strategies involves substantial risks, including the risk of loss of invested capital. These investments are typically made through unregulated investment funds that employ sophisticated investment techniques, often involving derivatives and leverage, in a wide range of financial instruments and markets. These investments entail a wide variety of risks, which remain substantial notwithstanding the risk management practices we employ in selecting and monitoring the funds in which we invest. Potential investors are urged to familiarize themselves with these risks before investing.
Prospective investors should consider the investment objectives, risks and charges and expenses of the any investment opportunity very carefully before investing. The prospectus will contain this and other information.

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