HD Capital Beats Peers

HD Capital, a Hong Kong-based hedge fund, has outperformed 97% of its peers this year by shifting capital away from artificial intelligence-related equities and into oil tankers and shipbuilding stocks [1]. The $200m multi-asset fund, led by chief investment officer Michael Wang, has returned to the top tier of industry performance rankings, with its largest positions including 11% allocated to oil transportation companies and 6.1% to shipbuilders as of April [2].

Wang said the outlook for tanker earnings remains constructive through the end of the decade, supported by constrained fleet supply and limited shipyard capacity following years of underinvestment [1]. He argued that the sector benefits from structural supply constraints while remaining highly responsive to geopolitical shocks, particularly amid ongoing tensions in the Middle East that have helped push shipping rates higher [2]. This bullish view on shipping contrasts sharply with HD Capital’s reduced exposure to technology and AI-related equities, which Wang described as increasingly vulnerable due to aggressive capital spending by major technology firms [1].

The shift has been reflected in performance across the sector, with shares of leading Asian shipping and shipbuilding companies, including COSCO Shipping Energy Transportation and Samsung Heavy Industries, posting significant gains over the past year [1]. In addition to its sector rotation strategy, HD Capital has also reduced overall equity exposure, cutting its allocation from above 90% to around 65% in March as geopolitical risks increased [2]. Meanwhile, other investors have also voiced their doubts about the AI trade, with a hedge fund run by a former OpenAI researcher placing huge bearish bets against top AI chip makers [3].

As interest rate and inflation markets, the oil outlook and tech investment bets have become more correlated, many assets that are not obviously linked have moved together in recent months [4]. The market is walking a narrow line, with investors warned that tech-driven correlations will make it harder to find places to hide if fears about inflation and rate hikes denting AI spending start driving world markets [4]. With HD Capital's bets on oil tankers and shipbuilders paying off, the real question is whether other investors will follow suit and shift their focus away from the volatile AI trade, and what this might mean for the broader market.