Whitney Tilson was once again available to share his investment advice in the second part of a series of interviews with Steve Forbes, chairman of Forbes Media. He talked about his to-and-fro motion on Netflix, Inc. (NASDAQ:NFLX) and what he thinks of Citigroup Inc (NYSE:C) among other things.
Tilson’s Short On Japanese Debt
Tilson graciously gave full credit to Kyle Bass for his bearish outlook on Japan which is the founding stone of his short thesis on Japanese debt. The granting of due credit to the people who influence Tilson’s ideas is nothing new—he is known to acknowledge the contributions of other value investors for his own original thoughts. Tilson’s view on Japan aligns with Bass, he thinks that Japan’s credit situation is so dire that even a small increase in interest rates could put the economy close to a debt collapse. Japan’s debt to GDP ratio is 200 percent and it has maintained ultra-low interest rates for quite a long time. Tilson said that Japan is a bug in searching to hit the windshield.
Strong Love For JDate
Tilson also took time to comment on his unusual investment in Spark Networks Inc (NYSEMKT:LOV), an online personals website. Tilson thinks that JDate, an exclusive platform for Jewish singles, and ChristianMingle are very attractive ideas and have a lot of value, as no other dating site has thought of such religiously dedicated platforms. JDate and Christian Mingle each contribute $26 million and $40 million to Spark’s annual revenues. He also said that it is very likely that Barry Driller’s Match.com is going to buy Spark Networks Inc (NYSEMKT:LOV) which would be a great way to generate cash profits for Tilson and would be thrilling for Driller as he loves online dating (business). By the way, Barry Driller is the CEO of IAC/InterActiveCorp (NASDAQ:IACI) which just happens to be a new pick of David Einhorn’s Greenlight Capital, who bought 436,708 shares of the company in Q1, pure coincidence!
On the subject of Apple Inc. (NASDAQ:AAPL), Tilson said that he is in it for the trade as it is likely that the company will launch a new product in this quarter and he sees the stock rising to $500-$550 over the next six months. At that point Tilson would decide whether he would like to stay in for longer or cash out. Pursuant to Tilson’s full disclosure policy, he detailed that he had bought Apple just a couple of weeks before earnings at below $400 and then added a little more after earnings.
Those Horrible Short Squeezes
Tilson is shorting some unnamed natural gas explorer with a market cap of $4 billion. He says that the company has a habit of claiming that it has found the largest natgas field in Papua New Guinea and keeps saying that it will partner with a big company like Royal Dutch Shell plc (ADR) (NYSE:RDS.A) but never does. Tilson has been on the short side of this company for over five years. Interestingly Tilson also said that he does not want to name the short because everybody jumps in and it results in a short squeeze, he said, “if everybody piles into the same shorts, you get these horrible short squeezes.” It would almost seem like Tilson is hinting to what happened when Ackman said he was shorting Herbalife Ltd. (NYSE:HLF).
Tilson is doing well in his long positions but his short book has been a carnage.