essays pieces of the puzzle
Thursday, February 14th, 2013
schisms

13 0214 tilson funds

Seven months ago, the two men behind the hedge fund T2 Partners, Whitney Tilson and Glenn Tongue, went their separate ways.

Tilson was the high-profile one, in the vanguard of the new brand of hedgies that talk their portfolios in the media.  When things don’t work, the public attention is intense too, as evidenced by the snarky comments about Tilson’s moves on Twitter and in the blogosphere.

In any case, the Tilson Funds were introduced in 2005.  The top panel of the chart shows the performance since inception of the Tilson Dividend Fund (TILDX) and the Tilson Focus Fund (TILFX), plus the S&P 500.  TILDX has done very well; TILFX has not, with a dramatic drop since last spring.

TILDX is sub-advised by Centaur Capital Partners, with Zeke Ashton as the portfolio manager.  TILFX was managed by Tilson and Tongue, but in the split, Tongue became the manager of the fund.  Tilson’s name is still on the masthead.

The lower panel surprised me.  It shows the total net assets for each fund (the stars denoting the amounts from semiannual reports until the daily data starts), and I thought that the chance to invest with Tilson would have drawn assets from the retail crowd.  TILFX never got very big and has peanuts in it now.  TILDX has done better, but has also lost assets despite good performance.

There are a lot of little funds out there, including ones like TILDX that were incubated and sold based upon partnerships (of various kinds) that no longer exist as they did.  This was a very public divorce.  Others are not and the schisms can be more subtle, yet if you’re putting your assets in the hands of an active manager, they can matter a great deal.  (Chart:  Bloomberg terminal.)