Tuesday, November 11, 2008

CNBC: Tontine Partners & Tontine Capital Closing Shop

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Dealbreaker, via CNBC is saying 2 of the 4 funds in a very well known hedge fund shop are closing their doors. Dealbreaker is probably the only website out there with a sense of sarcasm more wicked than ours ;)

David Faber reports that Jeffrey Gandell will be liquidating and closing Tontine Capital and Tontine Partners, which sort of makes sense, considering their performance of late. But don't worry! Because of its relatively stellar returns--October: -30.60%, YTD: -53.90%--Tontine 25 will be kept open, as will Tontine Financial, which is said to be down 83.3 percent for the year.

Our buddy at Marketfolly wrote about Tontine's holdings in August - the suffering at the funds has not been a secret and certainly many other hedge funds were targetting the shop's holdings on the short side... it's a shark eat shark world. The manager, Jeffrey Gendell, had racked up a heck of a track record until this year.... Black Swan strikes again.
  • If you're unfamiliar with Gendell and his Tontine Partners, then here's what you need to know. Founded 11 years ago, Tontine is a $10 billion fund ran by Jeffrey Gendell. He specializes in macro investing and takes very large, concentrated positions in companies he feels will benefit from those macro themes. Additionally, he will take on an activist role when necessary, to ensure shareholder returns. The fund has posted returns in excess of 100% in both 2003 and 2005.
EDIT: Here is the CNBC report

Tontine Partners, one of the largest and most successful hedge fund families, is now liquidating two of its major funds, Tontine Capital and Tontine Partners, CNBC has learned.

The hedge fund has also filed a number of Schedule 13D forms with the Securities and Exchange Commission to sell major holdings Tontine has in firms such as Exide Technologies [XIDE 3.76 -0.45 (-10.69%) ], Broadwind Energy [BWEN 7.5 -1.75 (-18.92%) ] and Westmoreland Coal [WLB 6.50 -1.30 (-16.67%) ].

The multi-billion dollar Greenwich, Conn.-based hedge fund, which is headed by Jeffrey Gendell, had posted average annual returns since 1997 of 38 percent.

Despite Gendell's track record for strong performance, this year bas been a dififerent story for Tontine. Tontine Capital is down 77.8 percent while Tontine Financial is down 83.3 percent for the year.

Gendell will be unwinding the funds for the next year and a half. However, the company is to keep Tontine 25 and Tontine Financial open.

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Another one bites the dust...


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