Whitney Tilson November Shareholder Letter

t2 hedge fund
Whitney Tilson

Whitney Tilson is the founder and Managing Partner of T2 Partners LLC and the Tilson Mutual Funds. The former (http://www.T2PartnersLLC.com) manages three value-oriented private investment partnerships, T2 Accredited Fund, Tilson Offshore Fund and T2 Qualified Fund, while the latter is comprised of two value-based mutual funds, Tilson Focus Fund and Tilson Dividend Fund (www.tilsonmutualfunds.com).

He is the author of More Mortgage Meltdown: 6 Ways to Profit in These Bad Times which we reviewed here., and co-author of the best book on Charlie MungerPoor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger.

To see my lengthy interview with Whitney Tilson from earlier this year  click here.

Einhorn’s FOF Re-positions Portfolio, Makes New Seed Investment In Year Marked By “Speculative Exuberance”

david einhorn, reading, valuewalk, internet, investment research, Greenlight Capital, hedge funds, Greenlight Masters, famous hedge fund owners, big value investors, websites, books, reading financials, investment analysis, shortselling, investment conferences, shorting, short biasIt has not just been rough year for David Einhorn's own fund. Einhorn's Greenlight Masters fund of hedge funds was down 3% net for the first half of 2020, matching the S&P 500's return for those six months. In his August letter to investors, which was reviewed by ValueWalk, the Greenlight Masters team noted that Read More

Below is some commentary from his newsletter for his hedge fund followed by the full document in scribd. His hedge fund is up approximately 215% over the past 11 years versus 15% for the S&P 500:

Our fund declined 1.9% net in November vs. 0.0% for the S&P 500, -0.6% for the Dow and -0.3% for the Nasdaq.  Year to date, our fund is up 10.0% net vs. 7.9% for the S&P 500, 8.3% for the Dow and 10.9% for the Nasdaq.

On the long side, three of our largest positions did well as General Growth Properties exited bankruptcy (as two companies, GGP and HHC) and rose 20.7%, Iridium reported strong earnings and raised guidance (the stock was up 13.2% and the warrants jumped 31.6%), and the Liberty Acquisition merger with Grupo Prisa was approved by shareholders and the Liberty warrants rose 7.6%.  Offsetting these gains on the long side were AB-InBev (-12.7%), Winn-Dixie (-9.3%), CIT Group (-8.9%), Kraft (-6.3%) and Microsoft (-5.3%).

On the short side, our fund was hurt by the rise in Under Armour (23.7%), Lululemon Athletica (21.0%), Netflix (18.2%), OpenTable (18.0%) and InterOil (6.7%).  Partially offsetting these losses on the short side were PulteGroup (-20.8%), St. Joe (-12.8%), Garmin (-11.8%), MBIA (-10.9%), Apollo Group (-9.3%), and Barnes & Noble (-6.4%).

Comments on the Past Three Months

Over the past three months:

  • Interest rates have risen materially (despite QE2, whose primary aim is to lower interest rates, 10-year Treasuries rose from 2.47% at the end of August to 2.81% at the end of November (a 14% increase), and 30-year Treasuries rose from 3.52% to 4.12%, a 17% increase);
  • The economy has failed to produce enough jobs to keep up with the growth of the job market, resulting in unemployment rising from 9.6% to 9.8%;
  • The housing market, already feeble and on government life support, has worsened, with sales and prices weakening;
  • The European sovereign debt crisis reared its ugly head once again, requiring a bailout of Ireland and raising fresh concerns not only about Portugal and Greece, but also Spain, Italy and Belgium; and
  • Last but not least, South Korea (the world’s 15th-largest economy) was shelled by North Korea, the world’s most unstable, unpredictable and dangerous regime, dramatically raising tensions in one of the most volatile areas of the world.

Had you told us three months ago that all of these things would occur, we would have confidently predicted stock market weakness, yet the S&P 500 instead jumped 13.1%.  Why?  There are two answers: fundamentals and froth.

The rest of the letter is embedded in scribd below. For best viewing click on fullscreen mode.