Tontine Jeff Gendell Opening A New Fund After Massive 2008 Losses
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Tontine Associates' Jeffrey Gendell, who is liquidating two hedge funds after heavy losses, is planning to start a new hedge fund in February, according to reports from Bloomberg.
In a letter to investors, Gendell said the new fund will invest in stocks believed to be undervalued and won't use borrowed money.
Gendell has been one of the top performers, returning an average of 38% annually to investors before this year's massive losses of more than 60%.
Leverage lead to the death Gendell's last two funds, so it is wise that he is turning away from the stuff. But will he be able to produce the results with just a cash account and will investors give him any more money? Time will tell. One person quoted in the article, Graziano Lusenti, founder of Nyon, Switzerland-based Lusenti Partners LLC, said, "I would be very surprised if people allocated new capital with him after such losses."
Existing Tontine clients who choose to invest in the new fund will pay a management fee of 1% and won't be charged an investment fee until their losses are recouped. New investors in the fund will be charged the industry-standard fees of 2% of assets and 20% of investment gains.
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