WHG Global Long Bias Fund commnentary for the month ended June 30, 2025.
Performance
- June: +7.6%
- YTD: +20.3%
- ITD: +83.9%
Monthly Commentary
Risk assets rose for the second straight month in June, despite ongoing geopolitical turbulence, thanks to two key developments: (i) progress in negotiations between the US and China on trade policy, and (ii) a quick cease-fire agreement between Israel and Iran. This backdrop led to a lower perception of an imminent recession, providing a tailwind for US stocks and, by extension, global markets. Carrying an above-neutral net exposure helped us capitalize on these movements.
Positive Highlights:
- Asia Tech: Idiosyncratic factors were a tailwind for the space, such as prices of legacy DDR4 memory which more than doubled after key suppliers ceased production despite elevated demand. SK Hynix, our key long in the sector, remained the leader after Samsung failed to qualify as an Nvidia HBM supplier. Our long in Xiaomi benefited from the announcement that its EV division would be profitable by 2H25, with its new YU7 SUV, a Tesla Model Y competitor, amassing over 200k pre-orders within 3 minutes of launch, indicating a substantial market share grab is underway for Xiaomi in China.
- Consumer Discretionary: We captured a relief rally in US consumer names by maintaining a net-long position in the sector throughout the month. Our position in Carnival was the top contributor, as the stock rallied on strong yield and pricing metrics – which validated our view, backed by our channel checks throughout the quarter.
- Precious Metals: Our positions in precious metals mining companies performed well, as gold remained at elevated levels and silver – which has more than half of its demand tied to industrial activity – was boosted by strong activity indicators and outperformed gold by 10 percentage points.
- Brazil: Our stock picks of 12 high-quality names with higher exposure to consumption recovery, and also on the financial sector, are expected to continue performing strongly amid an increasingly positive outlook for Brazil.
- Short Tesla: The stock declined due to several headwinds such as (i) increased competition in China, (ii) a 40% YoY drop in EU deliveries in May, (iii) regulatory risks around robotaxi in Austin, and (iv) margin pressure from rising rare-earth costs and availability risks. Despite pricing adjustments and growth in orders outside Asia, the stock underperformed.
Negative Highlights:
- Oil Hedge: Despite negative fundamentals, our hedge position in the commodity was affected by factors such as a seasonal uptick in OPEC+ countries' domestic demand (about 1%, limiting export growth), and a higher risk premium due to the Iran–Israel conflict.
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