T2 Partners

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 funds, and you do not need to do anything. We are, however, modifying our structure: Whitney will become the sole principal of T2 Partners and its three primary hedge funds. Glenn will be establishing a new investment firm, Deerhaven Capital Management, that will independently manage the T2 SPAC Fund, which will be renamed the Deerhaven Fund and become his hedge fund vehicle…Whitney’s Plans: “To ensure that I can focus intensely on in-depth company and industry analysis, I will adopt a much lower public profile and let my investment returns speak for themselves. Specifically, I will dramatically reduce my television appearances, interviews with the media, blogging/writing, and public speaking, both in the investment and philanthropic realms. I also plan to write letters to you quarterly rather than monthly (our bookkeeper will, course, continue to send you monthly statements).” [T2 Letter]

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

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: Read more »

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 own meaningful positions in 8 of our 10 (and 15 of our 20) biggest losers on the longside in 2011. If even a handful of these stocks perform like we think they will in the next 1-3 years, we won’t look as dumb as we do today– and thus we might give ourselves a C for 2011. If these stocks don’t recover then we deserve a D. Why not an F? Because an F is reserved for blowing up- and we didn’t…We feel badly about our recent performance and obviously wish we’d done many things differently, but we are not at all discouraged, as we’ve been through this before. If you look at our performance table at the beginning of this letter, you will see that we’ve lost more money, much faster, on two other occasions: we were down 27.4% in eight months from June 2002 – January 2003, and down 32.8% in five months from October 2008 – February 2009. In both of these cases, by playing a strong hand and buying more of our favorite stocks as they plunged, we made back all of the losses (and then some) remarkably quickly: in only nine months in 2002-03 and a mere seven months in 2008-09. We could not be more confident that we will rebound strongly from our latest losses [-24.9 percent for 2011] as well. Read more »

“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 transport. “Plus, it’s great exercise!” [WSJ]

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. Read more »

“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 out here.’ And later, to the Journal: “It’s been frustrating to see our original investment thesis validated, yet not profit from it. It certainly highlights the importance of getting the timing right and maintaining your conviction even when the market moves against you. The core of our short thesis was always Netflix’s high valuation. In light of the stock’s collapse, we now think it’s cheap and today established a small long position. We hope it gets cheaper so we can add to it.” [Forbes, WSJ]

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 in late 2008-early 2009, how we’re in the same boat, our economic outlook and our fund’s positioning, how we approach investment decision making today, our biggest winners and losers this year, and seven stocks.” Read more »