Jeffrey Gendell's Tontine Capital Trims Innospec (IOSP) Stake ~ market folly

Friday, June 24, 2011

Jeffrey Gendell's Tontine Capital Trims Innospec (IOSP) Stake

Jeffrey Gendell's hedge fund firm Tontine Capital recently filed a 13G with the SEC regarding shares of Innospec (IOSP). Due to trading on June 13th, Gendell's firm has disclosed a 10.9% ownership stake in the company with 2,578,651 shares.

This is a slight decrease in their position size as they've trimmed their stake by 14% since March 31st when they owned 3,008,651 shares.

It's been a long time since we've covered this hedge fund firm. Gendell takes large positions in companies he feels are poised to benefit from selective themes. He will also take an activist role if needed.

Tontine's Comeback?

Tontine returned over 100% in 2003 but then came back down to earth. In 2008, their Partners fund returned -91.5% as they were stuck holding concentrated positions in illiquid shares during the financial crisis as forced selling accelerated.

As such, two of their funds closed down and Tontine landed on the top hedge fund manager losers of 2008.

At the time, it seemed ironic that 'Tontine' was named after an older annuity created by Lorenzo de Tonti where investors desire to be 'the last one standing.' In this arrangement, investors pool their money and as they die off the remaining investors split the deceased's stake. The last investor standing then inherits the riches.

By naming his firm as such, Gendell obviously desires to be the last man standing. He almost went by the wayside in 2008 but quietly over the past few years has re-tooled and re-built his hedge fund firm.

Per Google Finance, Innospec "develops, manufactures, blends and markets fuel additives, personal care and fragrance products and other specialty chemicals."

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