The Discovery Global Opportunity Fund got off to a strong start to the second half of the year. The hedge fund headed by Tiger Cub Robert Citrone posted a 4.2 percent net gain in July and is now up 17.5 percent in 2025.
This year’s strong performance is a continuation of an outstanding multiyear run that has made Discovery one of the hottest hedge funds over the past two and a half years or so. It climbed 52 percent in 2024 and 48 percent in 2023.
Discovery is a combination macro fund and fundamental global equities fund that invests heavily in both developed and emerging markets.
In his July monthly report dated August 7 and obtained by Institutional Investor, Citrone told clients July performance was led by equity and currency positioning across developed and emerging markets, with stock selection and trading the largest contributors to alpha.
By country, the largest contributors were long positions in Mexico, short positions in Brazil, and long U.S. consumer stocks. The biggest detractor was long Argentina positioning owing to concerns about the upcoming midterm elections and International Monetary Fund tensions pressuring the currency and bonds.
Looking ahead, Citrone said he had trimmed net equity exposure. The hedge fund is now net short 25 percent, citing a “combination of speculative tech strength, tariff-driven policy risk, and diverging central bank signals.” At the same time, the portfolio is net long credit by about 30 percent.
“We continue to anticipate that more attractive entry points may emerge later in the quarter as evolving macro dynamics and rising volatility challenge sentiment-driven rallies and shift the focus back to fundamentally based opportunities,” Citrone explained. “In the meantime, we are maintaining the flexibility to adjust our stance as conditions evolve.”
Discovery continues to be long Latin America, especially in Argentina, where it is invested in dollar- and peso-denominated sovereign bonds and equities, Mexican stocks, with a smaller exposure to equities and bonds in Venezuela and Peru.
Discovery is also long select U.S. equities in financials, industrials, TMT, materials, and energy, as well as corporate credit. Other long positions include Nigeria across credit and currencies, Indian equities, and Greece.
On the short side, in the U.S. it has “select equity structural shorts” in financials, health care, and TMT. It is also short select Europe positions across equities, currencies, credit, and rates.
In addition, Discovery is betting against emerging-markets currencies in China, Hong Kong, and South Africa. Other short positions include industries disrupted by tariffs like global autos, shipping, and pharmaceuticals companies; Japan across select equities and some currency; U.S. rates; and Brazil across equities and rates.
