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Whitney Tilson July Performance And Investor Letter

Tyler Durden's picture




 

Whitney Tilson was up 3.5% in July, surprisingly not beating the market's 7% rip, even with his well publicized BP position (cost basis of $29). Tilson's notable movers: "On the long side, winners of note included BP (up 33.2%), Goldman Sachs (14.9%), Resource America (13.0%), American Express (12.4%), AB InBev (10.5%), CIT (7.4%), and General Growth Properties (5.0%), slightly offset by Berkshire Hathaway (-2.5%). On the short side, we profited handsomely from VistaPrint (-30.4%) and Gentiva Health Services (-23.6%), but these gains were more than offset by losses on MBIA (up 54.7%) and InterOil (35.1%)." Additionally, Tilson shares an in depth thesis of his three favorite stocks: AB InBev, Microsoft and BP.

Tilson discusses his positioning for the future as follows:

In general, we believe that in the aftermath of the bursting of the biggest asset bubble in history, we are in uncharted waters and there is a very wide range of possible outcomes over the next 2-7 years. Broadly speaking, they fall into three scenarios:

1) A V-shaped economic recovery with strong GDP growth (3-5%), a falling unemployment rate, and reduced government deficits. Under this scenario, the stock market would likely compound at 7-10%.

2) A “muddle-through” economy with weak GDP growth (1-2%), unemployment remaining high (7-9%), and continued government deficits. Under this scenario, the stock market would likely compound at 2-5%.

3) A double- (and triple-, and quadruple-) dip recession where periods of growth are followed by periods of contraction, with no overall GDP growth, unemployment around 10% (with the actual level higher due to people giving up looking for work), and large deficits as the government tries to stimulate the economy (but with little impact). Under this scenario, which looks like what Japan has gone through for more than two decades, the stock market would be flat to down.

Both as investors and as Americans, we’re of course hoping for 1), but fear that this is the least likely of these scenarios. A few months ago, we would have guessed (and it’s no more than an educated guess) that the odds were 25%, 50% and 25%, respectively, but in light of recent weak economic indicators, the odds have shifted unfavorably. Hence, we are positioning our portfolio more conservatively, trimming some of our longs, adding to our short book, and increasingly shifting our long portfolio into big-cap, strong-balance-sheet, dominant-market-position blue chips like Berkshire Hathaway, AB InBev and Microsoft, as well as short-duration, special situation investments like BP and Liberty Acquisition Corp. warrants.

Full letter and Tilson's VIS presentation. We won't summarize it: that's how confident we are in our readers' basic reading comprehension skills.

monthlyletter-july10

 

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Tue, 08/10/2010 - 11:10 | 512617 wang
wang's picture

if you like zuckerman he's co hosting bloomberg tv with MB this hour

 

mms://a627.l2479952251.c24799.g.lm.akamaistream.net/D/627/24799/v0001/reflector:52251

Tue, 08/10/2010 - 11:27 | 512669 bob_dabolina
bob_dabolina's picture

Ping is up 45.9% for the year.

For those unfamiliar he was the trader at SAC who was fired for urinating on junior traders, forcing them to take female hormones, and made blowjobs a prerequisite for placing a trade.

Go Ping!

Tue, 08/10/2010 - 11:28 | 512675 qussl3
qussl3's picture

Isn't it interesting how that even in the douple triple dip scenario that expectations for stocks are flat to down? Not down, Down, DOWN?

Tue, 08/10/2010 - 11:34 | 512690 wang
wang's picture

zuckerman just now double dip maybe a Triple Dip

Tue, 08/10/2010 - 11:58 | 512741 RobotTrader
RobotTrader's picture

Yep.

We are careening headfirst into a Global Systemic Collapse.

That's why consumer discretionary names like Fossil are breaking out to new highs....

LOL....

Tue, 08/10/2010 - 13:07 | 512894 dcb
dcb's picture

the market goes up 7% in a month, which would be an annual rate 90% percent, and then wall street screams qe2 because it isn't doing that. these guys appear to want 70% a year. what happened to the idea of 8% a year.

Tue, 08/10/2010 - 13:55 | 512972 Pegasus Muse
Pegasus Muse's picture

Gates hawking Fossil.  Robotraders & HFT bots juicing the stock.  Great reasons to buy.  lol  

 

George Washington's piece on BP and the eco-disaster it caused is closer to reality than Tilson's view:

http://www.zerohedge.com/article/government-dealing-oil-spill-soviets-dealt-chernobyl 

Tue, 08/10/2010 - 14:48 | 513178 VWbug
VWbug's picture

haha  i spoke too soon...yes we should all take GW's advice on BP, as he's been so right and Tilson has been wrong, lol

Tue, 08/10/2010 - 14:45 | 513166 VWbug
VWbug's picture

really interesting read...I won't touch BP but I will take a closer look at mr softy and Inbev.

I suspect some zh'rs won't like his analysis of BP and the spill.

Wonder who's right? Zillionaire pro money manager or basement dwellers?

Tue, 08/10/2010 - 19:34 | 513977 No More Bubbles
No More Bubbles's picture

Who gives a damn what Tilson thinks?  He's just another Fat-Cat Wall Street gambler that's all part of this whole cesspool system. 

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