Tilson's March letter is out as of early April--he just can't resist bashing GMCR--reiterating that last month they called GMCR as the next Krispy Kreme--here is the excerpt:
Our fund rose 10.6% in March vs. gains of 3.3% for the S&P 500, 2.1% for the Dow and 4.3%for the Nasdaq. Year to date, during the best first quarter for the S&P 500 and Dow since 1998,and the best for the Nasdaq since 1991, our fund also had its best first quarter, jumping 23.6% vs.12.6% for the S&P 500, 8.8% for the Dow and 18.9% for the Nasdaq.On the long side, winners included Iridium warrants (45.1%), dELiA*s (32.1%), JP MorganChase (17.2%), Howard Hughes (15.0%), Citigroup (9.7%), Wells Fargo (9.1%), AB InBev(8.1%), and Goldman Sachs (8.0%). Our only losers of note on the long side were J.C. Penney(-10.5%) and Grupo Prisa (B shares) (-8.6%).
Despite the market’s rise, we eked out a gain on the short side thanks to our two largest short positions, Green Mountain Coffee Roasters (which in last month’s letter we said is likely to bethe next Krispy Kreme) and InterOil, falling 27.9% and 14.5%, respectively. Also contributingon the short side were First Solar (-22.4%) and OpenTable (-16.6%), offset by St. Joe (18.0%),Tesla (11.5%), and Lululemon (11.5%).
Salt- Maybe you can help clarify where Tilson comes up with his 27.9% figure.....since he's quoting GMCR falling 27.9% , I believe that figure is in relation to his average short position..ie. he's short GMCR at an average price of $59.90 thru March 30....and GMCR closed March 30 (end of T2's qtr) at $46.84....$46.84 is approx.27.8% less than $59.90..
It can't be for the Quarter since GMCR closed Jan.3rd at $46.58 and closed March 30th at $46.84
It also can't be for the Month since GMCR closed March 1st @ $67.21 and closed March 30th @ $46.84
Tilson in past comments stated that he thought GMCR "was overvalued at $30.00 all the way up"
He also stated he was short GMCR before Einhorn's Oct. 17th dawg & pony show...
This again confirms to me that both Einhorn & Tilson's average short positions is/ was much lower than they would have you believe.. they started shorting GMCR way too soon...and as the stock price rose to $90.00 and above, they were desparate to bring it down by any means possible.
As far as GMCR being another Krispy Kreme...either Tilson believes this statement and is still short GMCR ....or...
Its obvious to any average Joe that this is an absurd statement but thought out by the little schemer for its shock value...might as well have said that GMCR was the next Enron....just plain BULL---S--T....if you're going to lie....lie so BIG....that they cannot not believe it...the sheer obsurdity is so overwhelming... a cunning little cretin he is...in fact its more likely he has unwound (or is currently unwinding) his short positions....and gone long...these schemers know earnings are just 16 trading days away (by my best guesstimate)....and remember....they are concerned about one thing only....the dollar that supports their lifestyle...everything else they tell you is contrived........to sway your opinions & actions to fulfill their end-game.. (and yes I believe I am still underestimating these b---tards)
CF--these are Tilson's monthly letters, and the math is always based on the monthly numbers--not overall returns (and he has been accurate on his math whenever I double checked him). I think his math is right again, GMCR down 27.9% for the month of March. It closed Feb 29 at 64. 97, and closed 3-30 at 46.84. That is a drop of $18.13, which is in fact a 27.9% drop.
PS--looking back I see you started with March 1 closing price-- you have to start with Feb 29 close when you calculate performance for the month of March. That makes his calculations exactly right percentage wise (and I think that is the correct way to do it)
Thanks Salt....correct me if wrong...so all Tilson is stating in his press release is that he made money on his GMCR short.....nothing else....just a basic statement....we in fact don't know what his average short position is....the 27.9% figure is just a statement by Tilson reflecting GMCR's fall over a certain period of time (one month) but IS NOT an accurate indicator of what percentage profit Tilson made on his short....is that correct as you see it? or not? Thanks
CF--you are correct. All Tilson does in these letters is state the percentage performance over the preceding month. He tells you nothing about his overall return on a position (until he closes it out, then he may give some more details--although sometimes he gives more detail up front--I think he did disclose he bought NFLX recently in $76 range). So, if he bought a stock at $20, and it fell to $10 on the last day of some month down the road, and then went up to close at $15 on the last day of the next month, he would tell you he was up 50% that month on that stock (true statement, even though he is down 25% from his purchase price).
The overall problem remains that funds have to disclose long positions on a quarterly basis but no disclosure required on short positions (and even on long positions you don't have buying prices, you just have size and value and you know they bought sometime within the 3 month window so you have a high/low range only)
Salt-Thanks you for verifying....now...we cleared that up in two posted messages...but summa cum laude Einhorn (Cornell) and magna cum laude (Harvard) Tilson can't find the words to explain the profit/loss in their GMCR short position in 10 words or less in their T2 statement to shareholders.......
BUT they're smart enough to tell us that GMCR is the next Krispy Kreme...
beat around the bush, mis-direct, parse words, throw out half-truths BUT never the truth and never simple facts...it makes you wonder how they got those illustrious degrees....
Our buddy Tilson is not having such a good day right now. If you recall, he was short Netflix forever, was very vocal about it, and finally tossed in the towel and said cover--all before NFLX price crashed. Then he recently went long NFLX--about when he was screaming to short GMCR.
Well NFLX was down $4.27 today, and down another $16 after hours and earnings report, so down about 19% today. Now, if GMCR can only crank off one of those 15 to 20% gains after earnings, his April and May summaries on his preformance may be good reading. Since he reports monthly performance, and with NFLX at $115 on March 30, and now around $85 after hours today, that would give him about a 26% drop for the month of April on NFLX if the $85 price prevails through end of April.
Salt....yes the link is at the bottom to download the files...I started the other day but then said to myself "why listen.'...we all know more about GMCR than that prep boy ever will.
That discussion by Tilson was worth listening to, just to learn a couple of things—particularly including he was already “painfully short” before Einhorn and that he remains fully committed to short position.
It starts with caller asking about GMCR, says down in price and are you thinking of taking off short or even going long? Tilson says no, and at end, says GMCR remains a “high conviction” short. He says you have to start by reading Einhorn, one of the best analytical pieces they have ever seen. Tilson admits they were “painfully short” GMCR before the Einhorn presentation. Says he did not know Einhorn was short or presenting on GMCR (how can that be true, presentation was at his conference—Tilson did not know what topics speakers at his conf were covering?). Says after Einhorn we looked at it further and increased short position (he still does not say if it is even profitable yet for them). His key pillars for short thesis are:
1. GMCR came out of nowhere, and this phenomenal growth due to patent protection with monopoly market share and monopoly pricing. It is coming off patent, and he is very skeptical the new product (VUE) will be successful. He says it is like drugs coming off patent protection, and this will have a “dramatic impact” due to patent loss. Says long analysts comments to ignore this are “nonsense”.
2. All sorts of signs they struggle with growth—management, inventory, financial abilities—all “very weak”. Maybe even shenanigans going on per Einhorn, and Tilson says he won’t comment further in this public cc (clearly indicating he knows more but won’t reveal it). He does say no real “smoking gun”, but claims lots of smoke so probably fire is there.
3. Insider Selling.
4. No cash flow, how are they spending 700m on capex? We can’t make numbers work.
Bottom line, he says it dawned on him about month ago, this is Krispy Kreme, and we all know how it crashed. He goes on and says we don’t believe estimates or the growth story any longer. Remains a “strong conviction” short.
I am not going through this point by point, as we have already addressed these issues. I just think it is important to know his current position and his reasoning.
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