Whitney Tilson, the hedge fund manager of T2 Partners, says we are in the 5th inning of the credit crisis. Tilson is concerned about the same things we have been rambling about for months on end: credit card delinquencies, commercial real estate, and further RMBS losses. Tilson did a fantastic interview on CNBC’s Fast Money this evening. The only downside to this interview is that Mr. Tilson wasn’t on the show for the entire hour.
Of course, if you’re familiar with Mr. Tilson you know he nailed the housing call and shorted banks and housing related names well before they tanked. Tilson is reshorting the banks currently. If you haven’t seen T2’s outline of the housing crisis then please click here. This is an absolute must read for all investors.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
a
Too bad Tilson’s mutual funds weren’t shorting stuff, or set up to do that.
Cullen Roche
Yeah, I am not sure how those funds are set up, but my guess is they’re long only since they seem to be deep value funds. You can’t really claim to be a value fund or a dividend fund and go around shorting stocks….No value or dividends in that….
a
Tilson’s mutual funds are value focused (one a concentrated fund and the other a dividend priority fund), but that doesn’t explain his behavior. It is very weird that Tilson thought stocks were overpriced enough to be shorting them in his hedge fund, but failed to take precautions in his mutual funds by moving a high percentage of their assets to cash or buying put options, if necessary by amending the fund documents. Him deciding to have his mutual funds fully invested in stocks when stocks were being priced like LBO targets sounds more like speculation than value investing.
Cullen Roche
Reminds me of RenTec and the way Simons runs his hedge fund. RIEF is doing horribly, but the fund with his money in it is kicking butt. I don’t know if Tilson has his own money in his MF’s, but I doubt. More likely he has his cash in his HF. I have never understood the structure of MF’s. Most of them are just enormous fee generating index matchers….