T2 Partners

  • News

    T2 Partners To Part Ways, Whitney Tilson To “Dramatically Reduce Television Appearances, Interviews, Blogging/Writing, And Public Speaking” And Focus “Intensely” On Investing

    We are writing to let you know that, after careful consideration, we have decided to cease managing money together and will instead do so independently, in the firm belief that in doing so our investors will benefit over time. The friendship and admiration we have for each other is unchanged, we will continue operating our […]

    / Jul 19, 2012 at 1:24 PM
  • News

    FYI, Whitney Tilson’s Investment Thesis On Goldman Sachs Has Not Changed In Light Of Times Op-Ed (Update)

    Having said that, T2 Partners will be “monitoring” the situation.

    The op ed in today’s New York Times by retiring Goldman Sachs Executive Director Greg Smith is the talk of Wall Street. We think we know Goldman well, as the company has been our prime broker for the past seven years and Goldman (both stock and call options) is one of our largest positions, so we wanted to add our comments.

    Our direct experience as a client of Goldman has been universally positive. The many people we have dealt with there have all been exceptionally talented and high-grade, and never once have we had a negative experience in which we felt that they took advantage of us or didn’t do what they said they would do.

    That said, we are not naïve. In all of our dealings with Wall Street firms, we assume that they are looking out for their own bottom lines, not ours. And we are certainly aware that the old, gentlemanly culture in which integrity and a customer-first attitude generally prevailed is long gone – not just at Goldman, but across all of Wall Street – and, in fact, across the entire financial industry (the reasons for this and what should be done about it are the subject for another day).

    When we think about investing in any company – especially a financial one, which is heavily regulated, leveraged, and particularly difficult for an outsider to analyze – we factor into our investment equation our assessment of the company’s culture and values, and, if we have any concerns, what the potential associated risks are, such as unexpected losses and regulatory action. In light of our view of the moral decay across the U.S. financial sector, we aggressively haircut our estimates of intrinsic value in the sector – some companies more so than others. But at some price, of course, any stock is a buy, and last August and September we felt that the negativity surrounding the financial sector was way overdone and hence made a big – and, so far, very profitable – bet on Goldman and a number of other U.S. financial firms.

    With the run-up in Goldman’s stock – after falling below $90 as recently as December, it’s now over $120, just above tangible book value of $119.72 as of 12/31/11 – we’ve been debating whether to trim or exit our position, so today’s op ed is timely. But is it relevant to our investment thesis? We think probably not, for two reasons:

    1) The argument that Goldman has become increasingly profit driven, sometimes at the expense of clients’ best interests, and that some employees use vulgar and disrespectful language is hardly news. What’s the next “shocking” headline: “Prostitution in Vegas!”?

    2) We highly doubt that Goldman is as truly corrupt as Smith makes it out to be. Goldman has more than 30,000 employees (including nearly 12,000 vice presidents, of which Mr. Smith is one) and has gone through wrenching changes in the past year, including savage cuts to bonuses and extensive layoffs, so it doesn’t surprise us that there are many disgruntled employees, especially those who are leaving. Is Smith one of them? It’s hard to tell, but here’s an email sent to me this morning by a former partner at Goldman (who generally agrees that the firm’s culture is not what it once was):

    There are a couple of things out of place. 1) This guy has been at firm for 12 years and is only a VP…a piss ant of sorts. He should have been an MD-light by now, so clearly he has been running in place for some time. 2) He was in U.S. equity derivatives in London…sort of like equities in Dallas…more confirmation he is a lightweight. Somewhere along the line he has had sand kicked in his face…and is not as good as he thinks he is. That happens to a lot of high achievers there.

    In summary, we think it’s likely that Goldman does the right thing for its clients the vast majority of the time – but not as certainly as it used to in the old days. Times have changed and the trend is unfortunate, but it is not unique to Goldman. In fact, we believe that Goldman still has a better culture and is more ethical than most of its competitors – though this is a very low bar to be sure.

    Our investment thesis on Goldman is simple: when all the dust settles, it will remain the premier investment banking franchise in the world – and, if so, will be worth a substantial premium to tangible book value. Smith’s column is a warning flag that we’ll be monitoring closely, but we believe our investment thesis remains intact and the stock is still cheap, so we’re not selling.

    / Mar 14, 2012 at 2:56 PM
  • Hedge Funds, News

    Whitney Tilson Was As Surprised As You Are To Learn That He Was Long Netflix On The Way Up

    NFLX is up 75% year to date so you probably assumed that Whitney Tilson had gotten rid of it sometime last year. You were not alone:

    We thought it was a little strange when Whitney Tilson and Glenn Tongue’s hedge fund T2 Partners’ latest 13F came out earlier this week and Netflix wasn’t included.

    We sent the hedge fund manager an email to find out why and there’s now a corrected version of the fund’s regulatory filing out.

    It turned out, it was just an error.

    As of December 31, 2011, T2 Partners had combination of 89,771 shares and 81,000 call options in Netflix, according to the updated 13F.

    Here’s Why Whitney Tilson’s 13-F Didn’t Have Netflix In It When It Came Out [BI]

    / Feb 16, 2012 at 4:29 PM
  • Communiqués

    T2 Partners: There’s A Good Chance We’re Not Actually As Dumb As We Look

    We struggle with how bad of a grade to give ourselves for 2011 because in some ways it’s too early to tell. Yes, many of our stocks took beatings during the year, but only time will tell whether we were wrong or just early. We think in most cases the latter, given that we still […]

    / Jan 10, 2012 at 8:10 AM
  • News

    Trades Not Workin’ Out For Ya? Area Hedge Fund Manager Will Show You How To Save A Buck

    “I save a small fortune in taxi and subway fares—plus untold hours sitting in traffic or on a subway platform—by riding my bike everywhere in Manhattan,” Whitney Tilson told the Journal, which estimates you can save “at least $4,000 a year,” in addition to what you spend on the gym, using Tilson’s chosen mode of […]

    / Nov 21, 2011 at 5:57 PM
  • Hedge Funds

    T2 Partners Just Wants To Make It Clear They Are Of Sound Mind And Judgment

    Seriously, all is good in the hood. Having said that, it was no easy task, emotionally, going long you know what after…all that’s happened.

    / Oct 26, 2011 at 2:56 PM
  • Hedge Funds

    Whitney Tilson: T2 Partners Nailed Its Netflix Short Except For The Fact That It Didn’t

    “If you go back and read our original Netflix piece, we pretty well nailed it,” Tilson told Forbes today. “But we were quite early – we were almost a year early. So we got clobbered to the point that we couldn’t take the pain, and we just said, ‘You know what? There are better shorts […]

    / Oct 25, 2011 at 4:24 PM
  • Hedge Funds

    Whitney Tilson: We’ve Been Here Before

    “Our fund declined 9.5% in September vs. -7.0% for the S&P 500, -5.9% for the Dow and -6.3% for the Nasdaq. Year to date, it’s down 29.6% vs. -8.7% for the S&P 500, -3.9% for the Dow and -8.4% for the Nasdaq…In the rest of our letter (attached), we discuss a similar period of underperformance […]

    / Oct 4, 2011 at 12:33 PM
  • News

    Whitney Tilson Has Seen Better Summers

    “Our fund declined 13.7% in August vs. -5.4% for the S&P 500, -4.0% for the Dow and -6.4% for the Nasdaq. Year to date, it’s down 22.1% vs. -1.8% for the S&P 500, +2.1% for the Dow and -2.2% for the Nasdaq. On the long side, our portfolio got clobbered across the board despite generally […]

    / Sep 2, 2011 at 9:43 AM
  • News

    Whitney Tilson: This Weekend’s Berkshire Hathaway Meeting Was “One Of The Best I’ve Ever Attended”

    Sayeth Tilson: “Buffett and Munger are razor sharp and at the top of their games, and Berkshire is just going gangbusters! (The insurance losses from Japan, New Zealand, etc. in Q1 that depressed quarterly earnings are essentially irrelevant to Berkshire’s long-term value.)”

    / May 3, 2011 at 2:25 PM
  • News

    Whitney Tilson Doesn’t Give A Hoot About This David Sokol Business

    T2 Partners is sticking with Buffett, Lubrizol incident be damned.

    / Apr 5, 2011 at 3:19 PM
  • News

    Whitney Tilson: “Why We Covered Our Netflix Short”

    The short answer: “It’s no fun being in front of an oncoming train.” The slightly longer answer:

    / Feb 10, 2011 at 5:15 PM
  • News

    Whitney Tilson On T2 Partners’ Netflix Short, Shorting Skills In General

    Last month T2 Partners’ fund declined 2.8 percent in January, with declines of 4.3% (net) in the last five months, which managing partners Whitney Tilson and Glenn Tongue noted “in isolation, isn’t a terrible number.” Having said that, “given that the S&P has surged 23.5% over the last five months, this has been, by far, […]

    / Feb 3, 2011 at 9:45 AM
  • News

    Netflix CEO Applauds Hedge Fund Manager’s Call, Balls To Short Company, Would Still Appreciate If He’d Refrain From Doing So

    Late last week, hedge fund manager Whitney Tilson sent out a detailed analysis of why his fund is short Netflix, which caught the eye of the company’s CEO, Reed Hastings. What’d Hastings think of the call? First off, he agrees you could make money shorting this thing. “It is possible that one could make money […]

    / Dec 20, 2010 at 10:45 AM

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