Hedge Fund Tontine Associates Sells Out Of 9 More Positions (Jeffrey Gendell) ~ market folly

Tuesday, February 10, 2009

Hedge Fund Tontine Associates Sells Out Of 9 More Positions (Jeffrey Gendell)

Tontine Associates, the hedge fund firm ran by Jeffrey Gendell has yet again filed numerous amended 13G's with the SEC. Tontine has had a very rough year and will be closing two of its hedge funds, which is the reason behind much of the portfolio shuffling. As we've detailed before, Tontine has recently sold out of 15 positions, as well as filed amended 13D's to many of their holdings. They recently filed 9 more amended 13G's and have sold completely out of the following companies (in no particular order):

  1. Ceco Environmental (CECE)
  2. Champion Enterprises (CHB)
  3. Downey Financial Corp (DWNFQ)
  4. Insteel Industries (IIIN)
  5. Ecology & Environment (EEI)
  6. Graftech International (GTI)
  7. Columbus McKinnon Corp (CMCO)
  8. Emcor (EME)
  9. Hovnanian (HOV)

They had previously held positions in these companies but no longer own shares. All of the filings were made due to activity on December 31st, 2008. You can view their entire portfolio here. Do note that the next update of portfolio holdings (13F filing) is due in a week or so, and their portfolio will undoubtedly change again as they continue to liquidate positions as they close down 2 of their funds.

If you're unfamiliar with Tontine, they specialize in macro investing and take 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. Conversely, this year has been the year from hell for Tontine. Recently, they announced they would be closing two of their hedge funds: Tontine Capital LP and Tontine Capital Partners LP. Two of Tontine's funds will remain open: Tontine-25 and Tontine Financial.

It has definitely been an astonishing year for Gendell, whose Tontine firm is named after an annuity invented by Lorenzo de Tonti. In such an annuity, investors contribute and collect dividends. As investors each die off, their share is left to the remaining partners. Therefore, the last man alive receives all the money. Gendell's desire is clearly to be that 'last investor' remaining. Such a goal becomes slightly ironic when you consider his firm suffered monumental losses and almost 'died' this past year. Gendell explains the turmoil they faced in his October letter to investors (.pdf format).

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