Tilson's T2 Reports 1.8% Drop in May; Reduces Short Book on 'Frothy Markets'
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Whitney Tilson's T2 Partners hedge fund issued its May 2011 results in a letter to shareholders, dated June 1, 2011.
T2 reported a 1.8 percent decline in the month, compared with (1.1) percent for the S&P 500, (1.5) percent for DJIA, and (1.3) percent for the Nasdaq. More notable, Tilson said that the fund is down 2.8 percent year-to-date, compared with the other three markets up markedly over the same time period (7.8 percent for S&P, 9.8 percent for DJIA, and 7.2 percent for Nasdaq).
From the note: "On the long side, the three winners of note were Winn-Dixie (Nasdaq: WINN), which reported strong earnings and jumped 28.5%, The Howard Hughes Corp. (18.1%) (NYSE: HHS), and Iridium (the stock rose 13.9% and the warrants 28.8%) (Nasdaq: IRDM). More than offsetting these gains were Delta Lloyd (-12.1%), Grupo Prisa(-8.2%), JC Penney (-7.9%) (NYSE: JCP), and Berkshire Hathaway (-4.8%) (NYSE: BRK-A).
We were essentially flat on the short side, with gains in OpenTable (-20.6%) (Nasdaq: OPEN), St. Joe (-16.8%) (NYSE: JOE), and MBIA (-14.7%) (NYSE: MBI) offset by a 78.5% jump in a relatively small position in Barnes & Noble (NYSE: BKS) which, after many months of shopping itself without success, received out of left field a buyout offer from Liberty Media. Such an offer for a business that is in very rapid decline speaks volumes about today’s frothy markets – and underscores the perils of short selling in this environment, which is why we've reduced our short book substantially this year. That said, we still have a number of high-conviction shorts, none more so than St. Joe."
T2 reported a 1.8 percent decline in the month, compared with (1.1) percent for the S&P 500, (1.5) percent for DJIA, and (1.3) percent for the Nasdaq. More notable, Tilson said that the fund is down 2.8 percent year-to-date, compared with the other three markets up markedly over the same time period (7.8 percent for S&P, 9.8 percent for DJIA, and 7.2 percent for Nasdaq).
From the note: "On the long side, the three winners of note were Winn-Dixie (Nasdaq: WINN), which reported strong earnings and jumped 28.5%, The Howard Hughes Corp. (18.1%) (NYSE: HHS), and Iridium (the stock rose 13.9% and the warrants 28.8%) (Nasdaq: IRDM). More than offsetting these gains were Delta Lloyd (-12.1%), Grupo Prisa(-8.2%), JC Penney (-7.9%) (NYSE: JCP), and Berkshire Hathaway (-4.8%) (NYSE: BRK-A).
We were essentially flat on the short side, with gains in OpenTable (-20.6%) (Nasdaq: OPEN), St. Joe (-16.8%) (NYSE: JOE), and MBIA (-14.7%) (NYSE: MBI) offset by a 78.5% jump in a relatively small position in Barnes & Noble (NYSE: BKS) which, after many months of shopping itself without success, received out of left field a buyout offer from Liberty Media. Such an offer for a business that is in very rapid decline speaks volumes about today’s frothy markets – and underscores the perils of short selling in this environment, which is why we've reduced our short book substantially this year. That said, we still have a number of high-conviction shorts, none more so than St. Joe."
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