The following is a letter from Whitney Tilson to hedge fund investors, which ValueWalk received via email.
I hope you’ve had a wonderful holiday season and wish you a happy new year.
This year has been a record-breaking year for initial public offerings with companies going public via SPAC mergers, direct listings and standard IPOS. At Techlive this week, Jack Cassel of Nasdaq and A.J. Murphy of Standard Industries joined Willem Marx of The Wall Street Journal and Barron's Group to talk about companies and trends in Read More
I will send you my annual letter later this month, but wanted to give you a quick update immediately, as I do at the beginning of every month.
Our fund rose an estimated 3.9% in December vs. 2.5% for the S&P 500 and 1.3% for the HFRX Equity Hedge Index. For the year, our fund finished up 16.8% vs. 32.4% for the S&P 500 and 11.2% for the HFRX Equity Hedge Index.
Winners on the long side in December were Grupo Prisa (B shares) (+23.5%), Hertz Global Holdings, Inc. (NYSE:HTZ) and Avis Budget Group Inc. (NYSE:CAR) (18.0% and 9.7%, respectively) and Spark Networks (9.2%). Thank goodness I exited dELiA*s in November, as it tumbled 26.7% in December.
For all of 2013, our three largest positions all year, Howard Hughes Corp (NYSE:HHC), American International Group Inc (NYSE:AIG) and Berkshire, all performed well, rising 64.5%, 44.6% and 32.7%, respectively. Other winners included Netflix, Inc. (NASDAQ:NFLX) (297.6%), Grupo Prisa (B shares) (172.6%), Deckers (109.7%), the Japan side fund (90.5% through November), Canadian Pacific (48.9%), Goldman Sachs (39.0%), and Citigroup (31.7%). The only decliners of note during the year were Spark Networks (-20.9%) and Iridium (-7.0%).
It was a different story on the short side, however. As I’ve discussed in previous letters, 2013 was horrific for pretty much all short sellers and we were no exception. I will discuss the year’s lowlights and lessons learned in my annual letter.
Our short book was flat in December, despite the market’s strong upward move, thanks primarily to InterOil (-41.8%), Krispy Kreme Doughnuts (NYSE:KKD) (-24.0%) and Opko Health Inc. (NYSE:OPK) (-19.9%).
In the rest of my letter (attached), I discuss InterOil Corporation (NYSE:IOC) and Lumber Liquidators Holdings Inc (NYSE:LL).
Entering 2014, I believe our fund is well positioned to outperform, as I will discuss further in my annual letter.
Kase Fund ltr to investors-12-13 PDF for download
Tilson letter also embedded in scribd
Kase Fund Ltr to Investors-12-13 by ValueWalk.com