HD Capital Ltd., a Hong Kong-based hedge fund, has outperformed peers by allocating a significant portion of its portfolio to oil tankers and shipbuilders. The $200 million multi-asset fund allocated 11% to oil transport and 6.1% to shipbuilders as of April 2026. According to With Intelligence, the fund beat 97% of its peers this year and over a five-year period.
Michael Wang, chief investment officer at HD Capital, said the tanker cycle could remain strong well into 2028-2029, as new capacity won't arrive until then. "Supply is tightly constrained, while demand can easily be triggered by geopolitical shocks. That's why the shipping cycle has visibility for years ahead," he said. He noted that the Middle East conflict has driven shipping rates significantly higher, while years of underinvestment left global shipbuilding capacity constrained, limiting new supply.
Shares of major Asian shipping firms, including COSCO Shipping Energy Transportation and crude oil tanker manufacturer Samsung Heavy Industries, have surged about 200% and 100% over the past year, respectively. Wang said his fund intentionally leaned into industrial names like shipyards and oil tankers given high earnings visibility, while peers chased tech and AI names. HD Capital cut exposure to stocks in March, trimming overall equity holdings from more than 90% to about 65% as geopolitical risks flared. The flagship Horizon China Non-US Feeder Fund has only 1% exposure to internet stocks.
Wang said US and Chinese tech behemoths are trapped in a race to develop their AI models through massive spending and may struggle to earn returns that justify their investments. "The entire AI capital expenditure globally looks like a bubble. They poured billions in the AI they created, but the revenue doesn't come close to what they spent," he said. The fund also profited from distressed opportunities closer to home, buying New World Development debt at steep discounts during a liquidity crunch.
Key Takeaways:
1. HD Capital allocated 11% to oil transport and 6.1% to shipbuilders, outperforming 97% of peers.
2. The tanker cycle is expected to remain strong into 2028-2029, as new capacity won't arrive until then.
3. COSCO Shipping Energy Transportation and Samsung Heavy Industries shares surged 200% and 100% over the past year.
4. HD Capital cut equity holdings from 90% to 65% in March as geopolitical risks flared.
5. The fund manager said global AI capital expenditure looks like a bubble, with revenue falling short of spending.
