Pirate Capital's Tom Hudson: Avast Maties, We're Not Sunk Yet

Posted by John Carney, Sep 14, 2007, 9:04am

Tom Hudson's Pirate Capital is kinda-sorta denying reports that it's assets are down almost 80 percent in the past year. He describes the reports from "various media" as "grossly misleading."

But are they? Pirate Capital's assets are way, way down. Here's Tom's full statement:

Various media have published grossly misleading information regarding results at funds managed by Pirate Capital. Some reports have suggested that Pirate funds lost almost 80 percent of their value in the past year. In fact, while assets under management have decreased, average returns over Pirate's four funds during the last year are about plus 4 percent.

Pirate Capital remains committed to its event-driven strategy to create value for its investors.

Two things. First: what the hell does that mean? As best we can tell, Tom means that Pirate's assets have diminished due to investor redemptions rather than just losses in the funds.

Second: that "average returns" business is pretty dodgy. There are lots of ways to calculate an average and there's no way to tell which method Tom is using here. The "average returns" over Pirate's four funds only matter to investors who are in all four funds. If you're in just one, it doesn't really help that the average returns are sailing in calm seas. You're already off to blackout island if you're in one of the two activist funds. Goldman Sachs has positive average returns but that hardly helps investors in Global Alpha.


Pirate Capital Statement Regarding Funds [Biz Wire Press Release]

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Comments

Posted by Proverbs 16:18, Sep 14, 2007 10:22AM

Pride goeth before a fall.

Posted by Tom Augenthaler, Sep 14, 2007 10:23AM

Tom's statements read like the legal pros and PR folks have gone over them carefully. The trick is to be as vague as possible while trying to discredit critics.

Posted by The Understander, Sep 14, 2007 10:31AM

"Event driven strategy....."? "Assets under management have decreased"...?

That's certainly an "event".

Thus, wouldn't Tom be shorting himself now?

Posted by life is harsh, Sep 14, 2007 10:34AM

@ Tom A

Absolutely! Which is why guys like Tom H will always have a place in this business.

Shameless self promotion is rewarded time and time again in this business, regardless of results. I am no longer amazed by it when I see it happen.

I just take it as a reminder that most investors are 'sold to' instead of 'buying' based on their own judgment, guess the are acknowledging they don't know.

Guys like Tom realize that if you never apologize, never admit you are wrong, yell, scream, piss and moan, you will convince someone to give you money to invest and or lose.

If you believe your own bullsh!t, someone else will too. Works on blondes at the bar as well.

Posted by chris, Sep 14, 2007 11:12AM

The old: Up 108% the first year, down 100% the second - so the average is up 4%. The match seems simple.

Posted by Fake Chuck Yeager, Sep 14, 2007 11:18AM

If Pirate was an airline with 108% positive safety record one year and a 100% negative safety record the next year, would you be booking your advance tickets today? Or were the pilots good ones who just happened to be on the wrong side of the flight path?

Posted by Fake Steve Fosset, Sep 14, 2007 11:22AM

What the fuck are you talking about Yager? 108% safety record? You can't have a 108% safety record. And if a hedge fund has a 100% down year then its out of business.... there's no money left.... see the math doesn't work that was the joke.

Posted by IB, Sep 14, 2007 11:32AM

2 FSF:

The 108% safety record is like the two-year dwebes that show up for interviews with their 4.762 GPA. They got extra credit!! Yeah, whatever, get back to your hole and finish that spreadsheet.

Posted by eleven thirty-two, Sep 14, 2007 11:33AM

What's a safety record?

Posted by chris, Sep 14, 2007 11:40AM

I'll grant Yeager a 108% safety record - if you shoot down 5 germans in one mission you get to write your own rules.

Posted by Fake Steve Fosset, Sep 14, 2007 11:44AM

I ballooned around the world

Posted by Some guy, Sep 14, 2007 11:48AM

Hey IB, it sounds to me like you are working on dealing with some personal frustration. What's the matter? Did some nerdy looking guy with an even nerdier GPA snatch that coveted job from you?

Posted by non-IB, Sep 14, 2007 11:52AM

I think IB's issue is that there's no such thing as a 4.762 GPA, just as there's no such thing as a 108% safety record. It seems his personal frustration, or personnel frustration, is with retards who have no clue and spout of statistics whose only use is to demonstrate the retardation of the spouter.

Posted by IB, Sep 14, 2007 11:53AM

the frustration is having him work for me

Posted by IB, Sep 14, 2007 11:55AM

BINGO! we have a winner

Posted by Some guy, Sep 14, 2007 12:02PM

IB:

So, out of simple curiosity, who do you want working for you, and more importantly, how can you tell what kind of a gem you are dealing with during your interview process?

Posted by Fake Steve Fosset, Sep 14, 2007 12:15PM

The problem is on the one hand getting a 4.7/4.0 is meaningless and probably inversely correlated to future success

On the other hand this person just spent $100k on a Masters in Power Point. You'd think AT LEAST they'd put in the time to get good grades, once they've bought into the undertaking

Posted by , Sep 14, 2007 12:28PM

Some guy, the candidate who has memorized the most brain teaser questions wins.

Posted by ib, shine my shoes., Sep 14, 2007 1:17PM

IB: A 4.7 GPA isn't de facto BS; some schools use a *5.0* base. Stupid schools, you know, like MIT.

Here's a little more education for you: Use a harmonic average to "average" returns which compound. Not that you'd know that since Excel does all your thinking for you.

Posted by IB, Sep 14, 2007 1:40PM

On CNBC, Peter Thiel just referred to "the MBA factor" as a contrarian indicator. "Late 1990s, they went to Silicon Valley. Now, private equity .... and they're always wrong." What an idiot, right? After all he went to Stanford, not MIT.

The GPA thing, always good for getting someone's goat. Such a badge of honor, they always miss the point.

Posted by Bulging Bracket, Sep 14, 2007 2:39PM

Masters in PowerPoint. Love it! MPpt.

At least it's more useful (marginally) than an MPP from Woodrow.

Posted by The Dish, Sep 16, 2007 8:25PM

What's the matter Tommy boy??? The truth was too harsh. You had to adopt Goebel's Nazi philosophy. You're only one that believe those lies.

Posted by Captain Morgan, Sep 17, 2007 5:45PM

The decrease in assets is as a result of redemptions. The onshore vehicle is doing OK performance-wise, but the fund is holding somewhere around $400 million and had held nearly $1.9 billion last summer. That is a nearly 80% decline in assets. It's not a reflection of Tom's ability to manage money, but it says something about the firm.

Posted by The Dish, Sep 18, 2007 8:30PM

Captain Morgan - what do you mean? the performance is terrible this year. The onshore vehicle (non-activist) vehicle is up only 3.5% through July and the offshore vehicle is down 3.5% through July. August was terrible for the fund. Their four biggest holdings (BCO, PBY, AGL, and ADG) make up 99% of its holdings were down 5.6% for August and down 1.9% for Sept. By that calculation, the onshore fund is down 3.9% and the offshore is down 7.4% ytd.

Hudson's 80% decline in AUM and performance is a reflection of his greed and hubris.

Posted by The Plank, Sep 18, 2007 8:36PM

Captain Morgan - what do you mean? the performance is terrible this year. The onshore vehicle (non-activist) vehicle is up only 3.5% through July and the offshore vehicle is down 3.5% through July. August was terrible for the fund. Their four biggest holdings (BCO, PBY, AGL, and ADG) make up 99% of its holdings were down 5.6% for August and down 1.9% for Sept. By that calculation, the onshore fund is down 3.9% and the offshore is down 7.4% ytd.

Tom's 80% decline in AUM and performance is a reflection of his greed and hubris.

The implosion of Pirate is also a reflection of Tom's inability to manage his assets and human capital. How else will one be able to justify having four stocks in the portfolio with three tied down by board seats and all the turnover in the investment team?

Posted by Scoeone, Oct 03, 2007 12:37AM

c

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