In the summer of 2021, John Stover, Portfolio Manager of Tribeca Asia Credit Fund, identified early signs of trouble in China’s property sector, particularly with Evergrande, one of its largest developers. As concerns grew, Stover swiftly reduced the fund’s exposure to Chinese property bonds, unlike many global investment firms heavily invested in High Yield bonds from the region. This cautious approach paid off when Evergrande began defaulting on bonds in November 2021, triggering a crisis that saw over 95% of Chinese private property developers default.
Stover capitalised on the crisis by shorting bonds of other vulnerable Chinese developers and subsequently buying bonds outside the Chinese property sector that were undervalued due to the mass sell-off. This strategy, combined with identifying companies likely to repurchase their cheap bonds, led to significant returns for the Tribeca Asia Credit Fund. By the end of 2021, the fund achieved nearly 25% returns and has seen a 70% return since its launch in 2019. Stover’s fund now focuses primarily on markets outside China, particularly India, avoiding the continued risks in the Chinese property market.
Read more here on The Australian Financial Review: AFR Article