Jeffrey Gendell's Tontine Associates Files 13G's, Sells Out of 15 Positions ~ market folly

Thursday, February 5, 2009

Jeffrey Gendell's Tontine Associates Files 13G's, Sells Out of 15 Positions

Tontine Associates, the hedge fund firm ran by Jeffrey Gendell has filed numerous amended 13G's with the SEC. As we've covered before on the blog, Tontine has had a very rough year and will be closing two of its hedge funds. The problem with their struggles is that they are the largest shareholder of some 8 companies and are trying to figure out what to do with those positions. Additionally, they've been shuffling their portfolio all around. We recently covered their most recent portfolio updates prior to these filings and we've covered their entire portfolio here.

Tontine filed amended 13G's on the following 15 companies and all the filings are essentially the same. We went through each individual filing and they were all similar in that Tontine sold completely out of their positions in the companies listed below. All of the filings were required due to activity on December 31st, 2008. So, as of these latest filings, Tontine has 0% stakes in the following companies and now holds 0 shares in each, having previously held a position in them:

  1. PowerSecure International (POWR)
  2. TRC Companies (TRR)
  3. Pike Electric (PEC)
  4. Tetra Tech (TTEK)
  5. Ryland Group (RYL)
  6. YRC Worldwide (YRCW)
  7. Perini Corp (PCR)
  8. Powell Industries (POWL)
  9. U.S. Concrete (RMIX)
  10. SIFCO Industries (SIF)
  11. PFF Bancorp (PFFBQ)
  12. M/I Homes (MHO)
  13. Accuride (AURD)
  14. Michael Baker Corp (BKR)
  15. AZZ Incorporated (AZZ)

So, given that they are closing down 2 funds, we'll have to keep an eye out to see what other positions they may be liquidating and exiting. Gendell & Tontine 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).

Information on the companies they sold out of, taken from Google Finance:

"PowerSecure International, Inc. (PowerSecure), formerly from Metretek Technologies, Inc., is a provider of energy management and conservation solutions to utilities and their commercial, institutional and industrial customers. The Company operates through its wholly owned subsidiaries, PowerSecure, Inc. (PowerSecure subsidiary), Southern Flow Companies, Inc. (Southern Flow), Metretek, Incorporated (Metretek Florida) and WaterSecure Holdings, Inc. (WaterSecure)."

TRC Companies, Inc. "is a national consulting, engineering and construction management firm that provides integrated services to the environmental, energy, infrastructure and real estate markets."

Pike Electric Corporation "is a provider of outsourced electric distribution and transmission services in the United States. It performs engineering, design, maintenance, upgrade and construction of electric distribution powerlines, sub-500 kilovolt (kV) transmission powerlines and substations for electric utilities, cooperatives and municipalities."

Tetra Tech, Inc. "is a provider of consulting, engineering, program management, construction and technical services focusing on resource management and infrastructure. The Company serves its clients by providing solutions to fundamental needs for water, environmental and alternative energy services."

The Ryland Group, Inc. "operates as a home builder and a mortgage finance company. The Company consists of six operating business segments: four geographically determined homebuilding regions; financial services, and corporate."

YRC Worldwide Inc. "is a holding company that through wholly owned operating subsidiaries offers its customers a range of transportation services. These services include global, national and regional transportation as well as logistics."

Perini Corporation (Perini) "is a construction services company, offering diversified general contracting, construction management and design-build services to private clients and public agencies throughout the world."

Powell Industries, Inc. (Powell) "develops, designs, manufactures and services engineered-to-order equipment and systems for the management and control of electrical energy and other critical processes."

U.S. Concrete, Inc. (U.S. Concrete) "is a producer of ready-mixed concrete, precast concrete and concrete-related products in select markets in the United States."

SIFCO Industries, Inc. (SIFCO) "is engaged in the production and sale of a range of metalworking processes, services and products produced primarily to the specific design requirements of its customers."

PFF Bancorp, Inc. "is a diversified financial services company. It conducts its business principally through its wholly owned subsidiary, PFF Bank & Trust (the Bank)."

M/I Homes, Inc. "is a builder of single-family homes. The Company sells and constructs single-family homes, attached townhomes and condominiums to first-time, move-up, empty-nester and luxury buyers under the M/I Homes and Showcase Homes trade names."

Accuride Corporation (Accuride) "is a manufacturer and supplier of commercial vehicle components in North America."

Michael Baker Corporation "provides engineering and energy services to public and private sector clients worldwide through its operating subsidiaries."

AZZ incorporated (AZZ) is "an electrical equipment and components manufacturer, serving the global markets of power generation, transmission and distribution, and the general industrial markets."

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