Tontine Associates to Close Two Hedge Funds ~ market folly

Wednesday, November 12, 2008

Tontine Associates to Close Two Hedge Funds

As I twittered out yesterday, Tontine Associates LLC, ran by Jeffrey Gendell, is said to be liquidating 2 of its hedge funds: Tontine Capital LP and Tontine Capital Partners LP. Taken from Bloomberg,

"Gendell gave no timetable for unwinding the funds, Tontine Capital Partners LP and Tontine Partners LP, during a conference call yesterday with clients, according to the people, who asked not to be named because the information is private. Options for raising cash include selling the funds' investments privately or pushing the companies in which they are the biggest shareholder to sell themselves. `The combination of falling commodity prices, massive anticipated hedge-fund redemptions and the seizing up of the credit markets cause an enormous dislocation in our portfolios,'' Gendell, 49, wrote in a letter to clients last month. The firm managed $7 billion at the end of 2007."

The good news, if you want to call it that, is that 2 of Tontine's funds will remain open: Tontine-25 and Tontine Financial. As we noted in our October hedge fund performance update, Tontine was -65.7% in October and now down an astonishing 76.8% for the year. You can view the long-side of their portfolio here, which lists many of the positions they'll have to liquidate. And, all of this news comes as they had just taken a 6.16% ownership stake in Myr Group (MYRG).

We also get word that they're exploring options for the possible liquidation of positions.

"For eight companies in which Tontine is the largest holder, the firm may try to sell its stake privately to another buyer, or push the company to put itself on the block, according to documents filed yesterday with the Securities and Exchange Commission. The eight companies are: Miscor Group Ltd (MIGL), Broadwind Energy (BWEN), Exide Technologies (XIDE), Neenah Enterprises Inc (NENA), Integrated Electrical Services Inc (IESC), Patrick Industries (PATK), Innospec Inc (IOSP), and Westmoreland Coal Co (WLB). Tontine may also transfer its shares in these companies to investors, the filings said."

Source: CNBC's David Faber & Bloomberg

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