Tycho Athos Event Driven Fund

Overview

Tycho Athos Event Driven Fund is an equity biased, event driven fund with a primary focus on short dated and liquid hard catalyst events in the Asia Pacific region and beyond. Athos Capital Limited was founded by Matthew Moskey and Fred Schulte Hillen, two seasoned event driven investors.

Strategy & Manager

Performance

Commentary

Investment Manager’s Commentary – December 2025

2025 was a successful year for the Fund, delivering positive performance across strategies over a year of consistent high-conviction exposure into a broad set of idiosyncratic themes that reflected significant work and discipline across the investment team. Broadly speaking, robust ECM deal-flow and spread activity across merger arbitrage opportunities, share class arbitrage dynamics in A/H, ADR and other dual listed company structures, as well as holding company discounts provided persistent areas of high conviction portfolio exposure, combining for a year of performance.

In December, positive performance was mainly driven by the spread compression in a core A/H spread, as well as in a non-fungible ADR spread, in both cases where we had materially increased exposure during recent widening. Material contributors to performance during 2025 included a Hong Kong listed company that paid out material cash dividends as well as holding company trades. In addition, several M&A spreads in Asia and globally saw milestones to completion, leading to consistent performance in that core book. Broad positive performance across strategies was partially offset by a company that faced strong industry headwinds after its IPO.

Spreads in Asian M&A as a percentage over the risk-free rate remained widely dispersed across Asian markets throughout the year, in line with the broadly differentiated historic risk outcomes in different geographies. As we likewise saw material market-driven volatility during the year (especially in April and October), we were able to both high-grade and increase risk exposure materially at points, adding significantly to static spread performance. Similarly, our merger arbitrage portfolio outside of Asia saw material additional returns over the course of 2026, reflecting both core opportunities in cross-border transactions (most significantly in the US Steel transaction), as well as the pronounced uptick in M&A activity in the US and globally during the second half of 2026. We expect global M&A to continue significant expansion over the near term around a broad range of strategic drivers, as well as the potential for changes in regulatory dynamics in the US after the midterm elections that should motivate large consolidating transactions, in particular towards the earlier part of 2026. While the momentum in global M&A in itself is positive for our strategy as it allows for opportunistic incremental risk exposure that is uncorrelated with our core Asian risk arbitrage exposure where spreads reflect attractive levels, it also tends to have a benign effect on Asian spreads as US and European portfolios concentrate their exposure more towards their home markets. This, combined with our expectations for increased deal activity after an already active 2025 in Asia, is the main reason why we expect spreads to remain elevated and attractive into 2026 in our core strategy and why we therefore expect to outperform as a result.

Both offshore non-fungible spread opportunities in TSMC and our A/H portfolio remain at near historic wide levels, with the portfolio materially positioned for both a reversion to the mean and, importantly, a broader market sell-off. This positioning significantly offset mark to market losses in early April as our long exposure in the captured local markets reacted much less significantly to offshore market pressures, leading to significant book protection. We enter 2026 with a similar level of protection across these portfolios. In addition, the broad exposure to A/H spreads comes with significant benefits to our capital markets strategy given our natural exposure to A/H names engaged in primary share issuances, particularly in the H Share market. Similarly, in fungible share class arbitrage opportunities, the heightened equity market volatility at points led to outsized trading opportunities over the course of the year, as especially liquid Chinese ADRs traded with increased overnight differentiation between the US and Hong Kong-listed lines.

Positive performance in the ECM strategy in 2025 was broadly dispersed across primarily secondary offerings across Japan, Hong Kong, onshore China, Korea and Australia, with more opportunistic trades in Southeast Asia and the United States. New CB issuances added meaningful performance during the year and continue to be an area of focus for the team. We expect these dynamics to continue in the near term and, having invested significantly in the team over the past two years, be more active in catalysing secondary trades directly with potential sellers over the year, which presented several outperformance opportunities during 2025.

Looking forward to 2026, the Fund is well positioned to benefit from the persistent deal activity particularly in Hong Kong and Japan, coupled with a continued and material uptick in overall transactional activity in the US and globally, combined with strong ECM deal-flow. We therefore remain highly constructive on the potential to maintain our 2025 level of performance into the new year.

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