Whitney Tilson Can't get anything right

[Eric50]

Sanjeev - 4000%, is that what you returned to your limited partners or your own return that includes the performance fee collected?

 

thks

Eric

[Parsad]

Sanjeev - 4000%, is that what you returned to your limited partners or your own return that includes the performance fee collected?

 

thks

Eric

 

Own.  But all the eggs were in one basket, so you cannot compare the end result to the fund result, where the consequences, risk mitigation, limitations, etc are completely different. 

 

And that was my point to Moore, that you cannot look at results in a vacuum.  So called "alpha" only cares about the final number, not how it was derived or the risk involved.  Cheers!

[Eric50]

Thanks Sanjeev. That makes sense. Also, the lower the initial investment of the general partner in the fund, the higher the return.

[Rabbitisrich]

I'm surprised that Tilson's long term results are so poor. His presentations are generally thoughtful and he surrounds himself with very smart people. His current porfolio seems undervalued. Is anyone familiar enough with his portfolio moves to explain his results?

[Parsad]

I'm surprised that Tilson's long term results are so poor. His presentations are generally thoughtful and he surrounds himself with very smart people. His current porfolio seems undervalued. Is anyone familiar enough with his portfolio moves to explain his results?

 

Just a bunch of his major holdings got hammered...Grupo Prisa, Resource America, Citigroup, General Growth, Iridium warrants, Winn-Dixie, Seagate, JC Penny, British Petroleum, Delias, Sears Holding, CIT Group, Howard Hughes, etc.  Cheers!

[Stone19]

He was on Fast Money tonight on CNBC

[Parsad]

Why does he go on that show?  Just so stupid.  Cheers!

[txlaw]

I just watched a video segment on CNBC where Tilson was asked about his opinion on MSFT's dividend hike.  He basically said the same thing that Sanjeev and Eric did earlier today.  He also talked about Skype being a horribly expensive acquisition (though he provided no analysis). 

 

Tilson also noted that he is continuing to redeploy from MSFT into DELL (something that many people on this board probably have been doing). 

 

Finally, Tilson said that he has now put his first ever currency trade on, which is the Ackman HKD trade.  Tilson explained the trade by saying the same thing that ValueGeek did in the thread on Ackman's secret trade ("The large payout is a function of how cheap the option is (eg, how low the volatility is).").  Tilson even used the term "vol", which was kind of funny to hear.

 

I guess the reason people tend to dislike Tilson is because when he comes on TV, he basically repackages everything that is being (or has been) discussed in the value investor community in a media-friendly way, and he is able to grow his businesses as a result.  It's a skill he has.

 

So I can see why people hate on him.  Gotta give him props for co-founding Teach for America, though.

[Parsad]

Well, to put it as plainly as possible, and perhaps it's a compliment, but he's a media whore.  He markets the hell out of his name, brand and funds.  So, is that a reason to dislike him...no.  More distasteful than anything else. 

 

But I've heard from others, and my own personal experience, is that he's not the most amiable personality to new people he meets.  Perhaps, because he meets so many, or perhaps because those people are less desireable if there is no economic incentive or something else to engage him.  I don't know. 

 

There isn't another investment manager in the "value" community that I know of who has such a polarizing effect on people - The Sarah Palin or Maury Povich of investment managers?  What do they say...if they ain't talking about you, then you're either dead or irrelevant.  Cheers!

[stahleyp]

I hope no one on here stops posting.

 

I don't know much about Tilson, but his mutual fund performance is trailing the average midcap blend fund and the S&P 500. In fact, his fund is trailing both benchmarks for the majority of the time since inception.

 

Moore, what is the background of the guys from Anson capital? Their results are pretty impressive so far.

 

As far as Mcelvaine goes, best I can tell is that after taxes, he has done a disservice to his investors. Thankfully for him, he gets to keep all those nice fees along the way though. He seems like a nice enough guy...but after 14 years or so and you are underperforming the S&P/TSX Total Return (his chosen index) after taxes (and more volatility)...that is atrocious.

 

Now, with that being said, he may very well come out on top over the long, long term. I have no idea!

[Guest Hester]

Why does he go on that show?  Just so stupid.  Cheers!

Well, to put it as plainly as possible, and perhaps it's a compliment, but he's a media whore.  He markets the hell out of his name, brand and funds.  So, is that a reason to dislike him...no.  More distasteful than anything else. 

 

But I've heard from others, and my own personal experience, is that he's not the most amiable personality to new people he meets.  Perhaps, because he meets so many, or perhaps because those people are less desireable if there is no economic incentive or something else to engage him.  I don't know. 

 

There isn't another investment manager in the "value" community that I know of who has such a polarizing effect on people - The Sarah Palin or Maury Povich of investment managers?  What do they say...if they ain't talking about you, then you're either dead or irrelevant.  Cheers!

 

He's definitely a media whore.

 

I've met him and had the exact opposite impression. He was very nice and courteous to me. Maybe I'm the exception for some reason I don't know. Our meeting was somewhat brief.

 

I love the Maury Povich reference.

[Parsad]

As far as Mcelvaine goes, best I can tell is that after taxes, he has done a disservice to his investors. Thankfully for him, he gets to keep all those nice fees along the way though. He seems like a nice enough guy...but after 14 years or so and you are underperforming the S&P/TSX Total Return (his chosen index) after taxes (and more volatility)...that is atrocious.

 

So is Fairfax stock, but I don't see anyone on here selling their Fairfax shares or saying the same thing about Prem.  It's a process.  People have bad years, even several bad years.  Look at Berkowitz or Bill Miller.  Mohnish was hammered through late 2007 and 2008.  But you make bets on managers because you think they have the right skills and discipline, and more importantly the correct temperament and ethics. 

 

The guys at Anson have three full years under their belt.  How can you know anything at all about them, even remotely, yet you have managers who have nearly two decades under their belt, and investors are questioning their abilities.  It's the ridiculousness of this that makes my mouth drop.  Peter Cundill, who has one of the best 30 plus year records in the last 100 years, hand picked Tim as his CIO.  The man that Buffett said is the type of investor he wanted for Berkshire, is the one who groomed Tim.

 

The problem isn't the managers, but the short-term view many investors take.  I would have no problem putting my money with Tim and betting on him for the next 20-30 years.  In fact, my family knows that if something happens to me, put half the money with Tim and the other half with Francis.  Cheers! 

[rijk]

half the money with Tim and the other half with Francis

 

just curious, why don't you leave anything with prem????

 

regards

rijk

 

[Parsad]

half the money with Tim and the other half with Francis

 

just curious, why don't you leave anything with prem????

 

regards

rijk

 

 

The money they allocate would be the capital outside of my Fairfax shares.  They know not to sell those!  Cheers!

[stahleyp]

As far as Mcelvaine goes, best I can tell is that after taxes, he has done a disservice to his investors. Thankfully for him, he gets to keep all those nice fees along the way though. He seems like a nice enough guy...but after 14 years or so and you are underperforming the S&P/TSX Total Return (his chosen index) after taxes (and more volatility)...that is atrocious.

 

So is Fairfax stock, but I don't see anyone on here selling their Fairfax shares or saying the same thing about Prem.  It's a process.  People have bad years, even several bad years.  Look at Berkowitz or Bill Miller.  Mohnish was hammered through late 2007 and 2008.  But you make bets on managers because you think they have the right skills and discipline, and more importantly the correct temperament and ethics. 

 

The guys at Anson have three full years under their belt.  How can you know anything at all about them, even remotely, yet you have managers who have nearly two decades under their belt, and investors are questioning their abilities.  It's the ridiculousness of this that makes my mouth drop.  Peter Cundill, who has one of the best 30 plus year records in the last 100 years, hand picked Tim as his CIO.  The man that Buffett said is the type of investor he wanted for Berkshire, is the one who groomed Tim.

 

The problem isn't the managers, but the short-term view many investors take.  I would have no problem putting my money with Tim and betting on him for the next 20-30 years.  In fact, my family knows that if something happens to me, put half the money with Tim and the other half with Francis.  Cheers!

 

Sanjeev, I respect your opinion a ton. With that being said, for Tim's performance, we are not talking about the short term. 14 years through an environment that has (mostly) favored the value style. Heck, with a small asset base, he could of bought a variety of indexes and done better. He didn't even beat the benchmark he chose.

 

You might very well be right that over 20-30 years he'll do better.  His long term track record would suggest otherwise. He also seems like a pretty decent fellow. You know him much, much better than I'm sure I ever will. However, if someone would've had faith in him and invested from when he first started his firm (according to his track record), he would have done them a disservice. On top of that, best I can tell, he is not like Chou and lowering his fees. So...he basically did a pretty bad job after taxes and still wants to get paid quite handsomely. I don't know how ethically sound that really is.

[Parsad]

Sanjeev, I respect your opinion a ton. With that being said, for Tim's performance, we are not talking about the short term. 14 years through an environment that has (mostly) favored the value style. Heck, with a small asset base, he could of bought a variety of indexes and done better. He didn't even beat the benchmark he chose.

 

You might very well be right that over 20-30 years he'll do better.  His long term track record would suggest otherwise. He also seems like a pretty decent fellow. You know him much, much better than I'm sure I ever will. However, if someone would've had faith in him and invested from when he first started his firm (according to his track record), he would have done them a disservice. On top of that, best I can tell, he is not like Chou and lowering his fees. So...he basically did a pretty bad job after taxes and still wants to get paid quite handsomely. I don't know how ethically sound that really is.

 

Hi Paul,

 

The underperformance came almost solely from one year of damage...2008.  If you looked at his track record until then, it was one of the best in the industry.  So he got hit bad in one year...and now he has to gain it all back, just like Mohnish or Prem did.  But if there was one guy I would bet on to do that, it would be him.  And if any investors were with him from day one, they should be doubling down on the guy right now, or moving other investments to him.

 

In regards to the fee, I agree with that.  I'm not a fan of the "1 & 20" or "2 & 20" type fee structure, simply because of outlier years like a 2008.  If you miscalculated, then you don't eat until you make it all back.  Unfortunately, Tim is not unique in this but the industry as a whole works this way.  Any mutual fund, most hedge funds, etc, operate exactly the same.

 

Tim, his family and his staff, all have most of their investments in the McElvaine Trust.  I think that helps a bit in regards to the compensation structure, since he has taken the same hit as every one of his partners.  For me, and this is a personal choice, honesty & ethics come first, then investment management philosophy and finally compensation structure.  The latter two don't matter if you don't have the first two.  Cheers!