T2 Partners' Tilson, Tongue Part Ways, To Manage Money Separately
07/19/2012| 03:27pm US/Eastern
By Amy Or
NEW YORK--T2 Partners LLC's two partners are parting ways, the firm said in two investor letters sent in recent weeks.
Whitney Tilson and Glenn Tongue are well-known managers in the hedge fund world and organize the Value Investing Congress, where high-profile stockpickers present their investment ideas. Stocks of companies mentioned by managers like Greenlight Capital's David Einhorn and Pershing Square Capital Management's Bill Ackman often reacted with abrupt share price movements.
The firm said it notified investors last month that Messrs. Tilson and Tongue would cease to manage money together, and has since sold most of the portfolio of stocks, including Berkshire Hathaway Inc. (BRKA, BRKB), Goldman Sachs Group Inc. (>> Goldman Sachs Group, Inc.), J.C. Penney Co. (>> J.C. Penney Company, Inc.), American International Group Inc.(>> American International Group, Inc.) and Netflix Inc. (>> Netflix, Inc.).
The T2 Accredited Fund gained 0.5% in June, when the Standard & Poor's 500 index rose 4.1%. For the first half, the fund accumulated 9% in gains, slightly under the benchmark's 9.5% rise.
But since inception in January 1999, the fund more than doubled, beating the Standard & Poor's 500 index's 41% gains. The letters didn't state the size of the fund.
After the split, Mr. Tilson will be the sole principal of T2 Partners and its three primary hedge funds, while Mr. Tongue will establish a new management firm, Deerhaven Capital Management and will independently manage the T2 SPAC Fund, which will be renamed the Deerhaven Fund.
"We will each have meaningful economic interests in our respective funds, so our interests are very much aligned," the letter said.
Mr. Tilson said in another letter, dated July 13, that he has been rebuilding the portfolio since the beginning of the month.
"Berkshire was easy--it's safe, cheap, growing nicely, and I know it well, having owned it for well over a decade, but certain other positions are going to require further analysis before I make an investment decision," he wrote.
T2 is now over 50% invested on the long side and more than 20% on the short side, with the intention of doubling both long and short exposures in coming months.
"In light of the weak economy in the U.S., the ongoing sovereign debt crisis in Europe, and the possibility of big problems in both China and Japan, I think it's a good time to have a lot of cash and be very patient in putting it to work," he wrote.
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