Whitney Tilson’s T2 fund fund declined 0.9% in February vs. gains of 4.3% for the S&P 500, 2.9% for the Dow and 5.5% for the Nasdaq. Year to date, the fund is up 11.5% vs. 9.0% for the S&P 500, 6.5% for the Dow and 14.0% for the Nasdaq.
On the long side, winners included Citigroup (8.5%) and SanDisk (7.8%), offset by Netflix (-7.9%), Grupo Prisa (B shares) (-7.4%), and J.C. Penney (-4.7%).
On the short side, he profited from First Solar (-23.6%), which just reported dismal earnings and guidance, Interoil (-10.4%), and Boyd Gaming (-8.7%). These gains were offset by Salesforce.com (22.6%), which is growing rapidly but trades at 8.7x revenues and has a $19.6 billion market cap despite being unprofitable. In addition, Green Mountain Coffee Roasters, which he think is likely to be the next Krispy Kreme (for those of you with long memories), rose 21.8%.
The rest of the letter embedded in scribd has his comments on Buffett’s annual letter and why we added to our Berkshire Hathaway position this week, even though it was already our largest. He has increased our estimate of intrinsic value to more than $178,000/share, more than 50% above today’s price of $118,360, based on $98,366 in investments/share plus applying a 10 multiple to our estimate of normalized pretax operating earnings of $8,000/share.
Appendix A is a transcript of Tilson’s comments during my CNBC appearance on Monday and Appendix B is the updated version of our Berkshire slide presentation (the full-size version is posted atwww.tilsonfunds.com/BRK.pdf). Page 15 shows that the stock trades at close to the largest discount to intrinsic value in two decades, despite the fact that Berkshire has never been stronger. Its balance sheet is awash with cash and the company has a diverse and robust collection of exceptional businesses that are collectively generating more than $1 billion per month for Buffett and Munger to allocate.