Whitney Tilson Can't get anything right

[moore_capital54]

Does anyone else have this feeling? I have been following the guy for almost 5 years now, his timing is always way off, and he has very little conviction with his good ideas. Take NFLX for example, the guy had a good thesis but balked because of Reed Hasting's SeekingAlpha article. Sometimes I feel Whitney Tilson just doesn't have any ba**s to be a real investor.

[PLynchJr]

When NFLX started it's recent dive he was the first thing that popped into my mind.  The NFLX situation definitely didn't improve my opinion of him. 

[shalab]

There were quite a few on this board that were short NFLX - how are they doing now?

[Swizzled]

I couldn't disagree more.

 

http://www.cfanebraska.org/Lists/Events%20Calendar/Attachments/42/T2%20Partners%20Investor%20Presentation-CFA%20Society%20of%20Nebraska-4-28-11.pdf

 

Page 5 has his track record since inception.  Looks pretty good to me.

 

He has underperformed for a year.  He was positioned perfectly for the financial crisis.  Invested very well during the tech bubble.

 

I find him to be thoughtful in his investing process, and willing to talk about mistakes.

 

 

 

 

[moore_capital54]

Swizzled that's from April, here is the most recent letter from Whitney:

 

From Whitney Tilson:

 

September 1, 2011

 

Dear Partner,

 

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.

 

 

I think Whitney falls into the class of investors that spends way too much time teaching, and is a brilliant writer. That presentation you posted is a perfect example. A responsible investor would not waste so much time on a 100 slide presentation. They must have spent an hour just cutting and pasting the logos of each berkshire subsidiary. Lot's of quotes and motivational BS. A long presentation should look like Ackmans on HKD bet. Filled with data and facts.

 

 

[Eric50]

I don't know any good investor who hasn't lagged the market over some periods of time.

[Swizzled]

 

Moore-Cap,

 

"[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."

 

So you are more interested in a one year lag than a decade plus of outperformance through various investment climates ?

 

Personally, I'm more interested in the process.  And when I look through his portfolio and his reasoning, I think he is doing the right things.

 

Of course it could well be that Tilson and I both suck, as my performance over the past 6 months has sucked HARD.  Strangely the companies underlying my bad performance aren't doing so bad.  Mr. Market just seems to have changed his thinking on them.

[claphands22]

If the market reacted differently, we'd be saying everything Tilson touches turns into gold.

 

His analysis is comprehensive, he communicates well, he has enough conviction to publish short/long ideas on the web for the world to throw stones at.  I think he was the only person who went short FFH and subsequently went long FFH; very respectable in terms of intellectual flexibility.

 

Also Tilson works with Glenn Tongue. So it would be more appropriate to level criticism to Tilson and Tongue; although, I don't think the criticism is warranted to begin with.

 

[Myth465]

He nailed BP.

[Tim Eriksen]

Does anyone else have this feeling? I have been following the guy for almost 5 years now, his timing is always way off, and he has very little conviction with his good ideas. Take NFLX for example, the guy had a good thesis but balked because of Reed Hasting's SeekingAlpha article. Sometimes I feel Whitney Tilson just doesn't have any ba**s to be a real investor.

 

Obviously your are exaggerating in order to make your point.  I don't think your assessments are fair.  His timing with NFLX was clearly off.  He was short (at least) as early as 2009 when NFLX was in the 40's from what I can tell.  But that is the danger in shorting high growth, high PE names.  They can run on you.  Usually soon after you throw in the towel they seem to tank.

 

His timing on his shorts during the meltdown were right on.  He performed better than the market but not as good as he would have like due to how he constructed his portfolio.  I believe he was using call options on some of his longs and wasn't viewing them on a "look-through" basis (assuming exercise) thus his long exposure was higher than he realized. 

 

Saying he lacks conviction would imply someone who does not make decent sized bets on securities he likes.  While he is not as concentrated as some value investors, he is willing to make a position 5 to 10% from what I have heard him say.  In fact, his recent under-performance is due to him essentially making a macro call and reducing their overall net exposure.  Thus he did not participate in the markets rally in the last half of last year.  Obviously he was wrong in the short run, but it was not due to lack of conviction or courage.

 

His overall performance numbers based on having only a 60% net long position is very good.  If after fees he can outperform the market with just 60% net exposure that is nothing to be ashamed of. 

[Parsad]

I'm the last guy who would defend Tilson, and he does ride a lot of coat-tails, but Mohnish had a very interesting comment this weekend at his AGM that everyone here should take a page from...especially all of those (guilty myself at times) of leveling criticism. 

 

Someone asked him what he thought about Gurufocus stalking his 13-F's, and he said that "I've always said I'm a shameless clone.  So if they copy me, the more power to them.  I think that's perfectly ok." 

 

Tilson may have his faults, but his results at T2 are good over the last 12 years or so.  His partner Glenn Tongue is actually a really nice guy, and also does much of the research and analysis there, so he also deserves as much credit for running that portfolio.  They've already said that this is their "annus horrible" so they aren't hiding behind any excuses. 

 

It's how people rebound from adversity that really makes the mark of a good investor or person.  Prem had plenty of criticism thrown his way for a few years after TIG and C&F, as did Mohnish when he had his bad 18 months.  Critics should probably give Tilson & Tongue a chance to prove themselves.  Cheers!

[mpauls]

I've wanted to throw a shoe at him for awhile.

[Myth465]

I've wanted to trow a shoe at him for awhile.

 

LOL

[Parsad]

I've wanted to trow a shoe at him for awhile.

 

You're not alone.  From the comments I've heard from people over the last couple of years, it seems as though Munger may have wanted to as well, based on those who attended a couple of his annual meetings.  Cheers! 

[mpauls]

Mohnish at least does his own homework.  Tilson seems more worried about getting his conference attendance and newsletter subscriptions up rather than the account balances of his investors.    (BTW I was at Mohnish's CA meeting.)

[moore_capital54]

Sorry Guys Ive been out today, just saw the posts.

 

I am sticking to my statement that Tilson sucks as an investor. An investor with $100 in 2007 in T2 would have 88$ today and an investor from 2005 would only have a little bit more than that after factoring in taxes paid. Tilsons fund was miniscule in 03 and 04 so there is no point in even respecting those figures. His fund is still very small today which makes it even more surprising how badly he has performed.

 

I think on this one you guys are wrong, and I generally am in total agreement with this board. There are lots of better investors than tilson, when taking into considering the weight and voice he has in the community. Compare him pound for pound to the people who he surrounds himself with. There is no comparison. If you remove the fact that he runs the VIC and mentions that ackman is his best friend in every convo with investors he would probably not have been able to raise any capital at all. 

 

I have attached a Bloomberg screenshot with the T2 Offshore Fund performance since 2003.

 

Hedge Fund Managers are supposed to be superstars not deliver you an avg return.

 

[moore_capital54]

Some more facts on T2:

 

If you had invested in 2001 in the T2 Accredited fund, 100 would be 133 After tAx (33% in a decade)

 

If you had invested in 2002 than you would have about 112 After tax (12% in a decade)

 

This is not superstar material. A bond fund would have delivered superior after tax returns with less risk and volatility. And if you guys think a decade is not long enough you are smoking something.

 

More importantly to be an investor in any asset class in 04 05 06 07 and not have absolutely killed it shows you were completely out of touch with the environment you are operating in. Take 2005 , Tilson delivered a 2.97% return, absolutely pathetic. Take 2007 he lost -3.47%. The guy continually takes the wrong side of the trade.

 

I have a lot more respect for Mohnish than T2. If Mohnish had the contacts T2 had he would be managing 4-5 Billion (if he so desired).

 

Tilson is a nice guy hes kind of like the guy at the gym that can tell you about all the exercises, the best way to do them, the history all that, but can't even bench press 100 pounds.

[Swizzled]

One thing I'm sure we can all agree on is that with the amount of marketing of himself that he does he had better be prepared for criticism.

[moore_capital54]

Does anyone else have this feeling? I have been following the guy for almost 5 years now, his timing is always way off, and he has very little conviction with his good ideas. Take NFLX for example, the guy had a good thesis but balked because of Reed Hasting's SeekingAlpha article. Sometimes I feel Whitney Tilson just doesn't have any ba**s to be a real investor.

 

Obviously your are exaggerating in order to make your point.  I don't think your assessments are fair.  His timing with NFLX was clearly off.  He was short (at least) as early as 2009 when NFLX was in the 40's from what I can tell.  But that is the danger in shorting high growth, high PE names.  They can run on you.  Usually soon after you throw in the towel they seem to tank.

 

His timing on his shorts during the meltdown were right on.  He performed better than the market but not as good as he would have like due to how he constructed his portfolio.  I believe he was using call options on some of his longs and wasn't viewing them on a "look-through" basis (assuming exercise) thus his long exposure was higher than he realized. 

 

Saying he lacks conviction would imply someone who does not make decent sized bets on securities he likes.  While he is not as concentrated as some value investors, he is willing to make a position 5 to 10% from what I have heard him say.  In fact, his recent under-performance is due to him essentially making a macro call and reducing their overall net exposure.  Thus he did not participate in the markets rally in the last half of last year.  Obviously he was wrong in the short run, but it was not due to lack of conviction or courage.

 

His overall performance numbers based on having only a 60% net long position is very good.  If after fees he can outperform the market with just 60% net exposure that is nothing to be ashamed of.

 

You have laid out maybe 5-6 mistakes he has made in a decade. An investor, a fiduciary should not have made that many mistakes. A professional's job is to lay out a strategy and execute, not learn on the backs of his limited partners. Why did he even make a macro call? Is he a macro trader: NO

 

The reason I started this thread, is because I totally agreed with his short thesis on NFLX and we went short big time on the name. When he covered a few days later we got squeezed and kept shorting, at one point we were down huge but kept the position, now we are very happy. I find it hillarious how he COMPLETELY changed his thesis because Reed Hastings made a blog post and it confirmed to me that he is more of an information whore than an investor.

 

Just logging and deploying information.

 

Did any of you guys watch Dan Loeb on CNBC? I am sure the ones that did asked themselves the following question: " Wow the guy seems pretty simple for such a successful investor" Some of you may have said the same about Einhorn when you first saw him speak. The best investors are soft spoken, not emotional, and are very steady in their demeanor. Tilson is ALL OVER THE PLACE.

 

It is better to know a lot about a little than a little about a lot.

[moore_capital54]

I've wanted to trow a shoe at him for awhile.

 

You're not alone.  From the comments I've heard from people over the last couple of years, it seems as though Munger may have wanted to as well, based on those who attended a couple of his annual meetings.  Cheers!

 

Parsad is Munger an LP @ Pabrai Funds?

[Parsad]

Mohnish at least does his own homework.  Tilson seems more worried about getting his conference attendance and newsletter subscriptions up rather than the account balances of his investors.    (BTW I was at Mohnish's CA meeting.)

 

Why didn't you say hi?  There were a bunch of board members there.  Cheers!

[Parsad]

I have a lot more respect for Mohnish than T2. If Mohnish had the contacts T2 had he would be managing 4-5 Billion (if he so desired).

 

Tilson is a nice guy hes kind of like the guy at the gym that can tell you about all the exercises, the best way to do them, the history all that, but can't even bench press 100 pounds.

 

This is incorrect.  Only 0.5% of fund managers beat the index by 3% or more long-term (10 years plus), so out of 10,000 fund managers, you only get 50 that can do that.  Of that 50, I would guess less than a third can beat the index by 5% annualized...so now you are down to about 16.  Of that, a third can beat the index by 8%...so you are now roughly at 5.  And of that, I would guess that 2-3 can beat the index by 10% annualized.  Is it any wonder Tilson isn't in that group?  But he is in that group of 50. 

 

I would actually say Mohnish's profile is as high as Tilsons now.  If Mohnish wanted to, he could easily raise $3-4B, but he doesn't want to.  He has a long waiting list even though the fund is not open.  And if and when he gets the opportunity to put capital to work in a big, big way, he is going to open the doors and let them flood in, but many at that point may not be able to.  He's happy doing what he is doing, and he likes his fund at the size it's at. 

 

Parsad is Munger an LP @ Pabrai Funds?

 

Not that I know of, but if he was, Mohnish would not tell anyone outside of his family and staff.  Cheers!

[Rabbitisrich]

I've seen Tilson make calculation errors or use slightly outdated information, but his presentations are useful and thoughtful. He didn't flip flop on his Netflix short so much as he updated his thesis to include momentum. If you put out a solid thesis, one that many people seemed to agree with, and the stock price runs over it, then you have to delever the trade. It's not the same as information trading.

[moore_capital54]

Parsad, I am signing off here, but will do a Fund screen tomorrow. I think I will find a lot more than 50 managers that beat the index by 3% over a decade.

[moore_capital54]

I just did one for shits and giggles. I found 441 Funds on Bloomberg that delivered a CAGR of 20% or more over the last 5 years. I can't do 10 years, but will find a way to do it tomorrow.

 

And keep in mind Bloomberg doesn't have access to all funds, IE: Non listed funds like Greenlight.

 

I think your numbers are way off.

 

There are hundreds of Managers that have outperformed the S&P by over 3% over the last decade. I can name 20-30 of which I personally know a dozen or so.

 

We did it as well, and we are a small time fund out of Toronto that nobody has ever heard of.