Firefly Value Partners, a value-orientated hedge fund with David Einhorn backing and $479 million of assets under management, lost 4.9% for the third quarter of 2016. Longs contributed 4.8% and shorts cost 10.6%. At the end of the quarter, Firefly was approximately 112% invested on the long side and 65% invested on the short side with 24 longs and 60 shorts.
Year-to-date the Firefly Value fund has produced a return of 8% for investors and since inception (end 2007) Firefly has returned 127.6% gross and 74.3% net. The fund’s top winner for Q3 was Rice Energy Inc with a gain of 2.7% followed by a position in CMA TARP Warrants (2.5% gain) and finally Buzzi Unicem, S.p.A. (1.6% gain).
Firefly Value: Wells Fargo and Deutsche Bank
Along with the analysis of a new short position, Firefly’s portfolio managers discuss the Wells Fargo scandal in the fund’s third quarter letter to investors. The comparison is made between Wells (a bank with total assets of $1.9 trillion and total tangible common equity of $148 billion or 7.9% of assets) and Deutsche Bank (a bank with assets of $2 trillion, total tangible common equity of $42 billion and a ratio of tangible common equity to assets of 2.3% of assets).
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