What We're Reading ~ 5/6/15

A must-read on behavioral finance: Thinking, Fast and Slow [Daniel Kahneman]

Margin debt hits all-time highs: why you shouldn't be concerned [Kimble Charting]

What you should and shouldn't learn from Warren Buffett [WSJ]

With big names and money flowing in, tech startups in India heat up [NYTimes]

3 stocks pitched by Weitz Value Fund [Forbes]

Transdigm: when is a large moat worth more than 30x earnings? [Seeking Alpha]

On the pricing and valuing of top managers [Aswath Damodaran]

A guide to reading for investors [Safal Niveshak]

A pitch on Viacom [BeyondProxy]

Tim Cook on Apple's future: everything can change except values [Fast Company]

Silicon Valley veteran steers Softbank's deals [WSJ]

How Airbnb could spawn an M&A frenzy in the hotel industry [Fortune]

Casinos failed Atlantic City, but they're still part of its future [The Deal Newsroom]

Insurers take on more risk in search of returns [NYTimes]

Hedge Fund T2 Partners: Updated Long & Short Positions, In-Depth Analysis of BP

Whitney Tilson and Glenn Tongue's hedge fund T2 Partners recently released their June letter to investors. In it, we get an update on their performance but more notably, we see some of their long and short positions. Additionally, they've attached an in-depth analysis of BP plc (BP). As you know, we've previously outlined Tilson's reasons for buying BP. The extension included in the letter further elaborates on the analytical rationale behind owning shares of the oil spill giant.

Performance wise, T2 had a very impressive month of June, up 4.2% net of fees compared to the S&P 500 which was down 5.2%. T2 sits up 9.8% for the year net of fees, handily outperforming the S&P again. Since inception, T2 has returned 189.9% net of fees compared to only a 2.6% return for the index over the same timeframe.

Here are some of T2's current longs (in no particular order):

Berkshire Hathaway (BRK.A/B)
Iridium (IRDM)
Liberty Acquisition Corp warrants
BP plc (BP)
Winn Dixie (WINN)
Microsoft (MSFT)
Echostar (SATS)
dELIA*s (DLIA)
General Growth Properties (GGP)

Of their longs, we've noted numerous times how hedge funds are finding value in large cap names and Microsoft (MSFT) is the perfect example of this. While some argue they face tough challenges ahead, there's no denying its cheap valuation by historical metrics. For another value large cap play, we also highlight T2 Partners' position in Anheuser-Busch InBev (BUD) as we presented their analysis of BUD from the Value Investing Congress.

In terms of other longs, we first covered when Tilson bought BP and the basic gist of this play is that there's a reasonable chance the oil could stop flowing sooner than people expect and that clean-up costs will be less than imagined a year from now. In the letter below you can read his full assessment of the oil spill situation, company balance sheet, and more.

And here are some of the hedge fund's short positions that they've revealed:

Pacific Capital Bancorp (PCBC)
Homebuilders via the Homebuilder ETF (XHB)
For-profit education companies (no specific names mentioned, most likely a basket)
Barnes & Noble (BKS)
Boyd Gaming (BYD)
MBIA (MBI)
InterOil (IOC) puts

While we've known some of these stakes from when we previously looked at T2's short positions, the disclosure of their Pacific Capital Bancorp short is new. This ties into one-half of the long moneycenter/short regional bank trade that many hedge funds have on. Additionally, Boyd Gaming (BYD) is another new short we're seeing for the first time from Tilson and Tongue.

Embedded below is T2 Partners' June 2010 letter to investors:



You can download a .pdf copy here.

For more investment ideas from Tilson and Tongue, they'll be speaking at the upcoming Value Investing Congress in New York City in October along with many other prominent hedge fund managers including David Einhorn, Lee Ainslie, John Burbank and more. Market Folly readers can receive an exclusive discount to the event here.