By Katrina Dean Allen
Colm O’Shea’s COMAC Global Macro gained 3.8% in November bringing its year-to-date return to 15.6% and continuing an 18-month winning streak during a volatile market. In that time, the firm has also more than quintupled its assets.
By contrast, the Absolute Return Macro Index returned 1.02% in November, up 6.24% for the year. Big picture macro players have been better able to navigate market uncertainty and London-based COMAC Capital is no exception. In 2008, O’Shea’s fund gained 30.7%, posting its best year since the fund launched in June 2006. COMAC is now managing a stunning $3.5 billion, up from $650 million in April 2008.
Returns in November were largely attributable to fixed income themes, particularly U.S. directional rates positions, U.S. curve themes and those relating to monetary policy divergence across the developed markets, O’Shea wrote in a November letter to investors. The firm also experienced small gains in FX. Losses came from developed market equities, but were offset by commodity gains and credit shorts.
An important theme in November was the re-emergence of concerns about stresses in sovereign balance sheets, O’Shea wrote. A key perpetuator of this theme was news that the Greek government has misreported its fiscal deficit. O’Shea sees concerns regarding the fiscal outlook in the U.S., Japan, U.K. and parts of Europe as serious and persistent issues that will continue to be market drivers in the foreseeable future.
The fund heads into 2010 net long fixed-income. O’Shea is also taking a positive view on certain currencies in emerging markets. The portfolio is long selected currencies versus the dollar, as well as long a basket of commodities and commodity currencies. The fund is also short equities in developed markets. Lastly, it is positioned for a higher FX and fixed-income volatility and wider credit spreads.
O’Shea began trading COMAC with a $300 million separate account from previous employer Balyasny Asset Management (BAM), where he was a portfolio manager, and $150 million from other investors. Prior to BAM, he was a portfolio manager for George Soros’ Quantum Endowment Fund, which he joined in the second quarter of 2003 from Citigroup where he was a managing director and Treasury bond portfolio manager. In his first year on his own O’Shea posted a return of 0.5%. In 2007, he came back stronger ending the year up 10.7%. By the beginning of 2008, he was producing positive performance and reopened his fund to new investments in February of 2008.
