Jeffrey Gendell's Tontine Associates: Portfolio Update

by: Market Folly

Tontine Associates, the hedge fund firm ran by Jeffrey Gendell has filed numerous amended 13G's with the SEC. As we've covered before on the blog, Tontine has had a very rough year and will be closing two of its hedge funds. The problem with its struggles is that it is the largest shareholder of some eight companies and are trying to figure out what to do with those positions. Additionally, the firms has been shuffling around its portfolio. We recently covered its most recent portfolio updates prior to these filings and we've covered its entire portfolio here.

Tontine filed amended 13G's on the following 15 companies and all the filings are essentially the same. We went through each individual filing and they were all similar in that Tontine sold completely out of its positions in the companies listed below. All of the filings were required due to activity on December 31, 2008. So, as of these latest filings, Tontine has 0% stakes in the following companies and now holds 0 shares in each, having previously held a position in them:

  1. PowerSecure International (NASDAQ:POWR)
  2. TRC Companies (NYSE:TRR)
  3. Pike Electric (PEC)
  4. Tetra Tech (NASDAQ:TTEK)
  5. Ryland Group (NYSE:RYL)
  6. YRC Worldwide (NASDAQ:YRCW)
  7. Perini Corp (PCR)
  8. Powell Industries (NASDAQ:POWL)
  9. U.S. Concrete (RMIX)
  10. SIFCO Industries (NYSEMKT:SIF)
  11. PFF Bancorp (PFFBQ.OB)
  12. M/I Homes (NYSE:MHO)
  13. Accuride (AURD.OB)
  14. Michael Baker Corp (NYSEMKT:BKR)
  15. AZZ Incorporated (NYSE:AZZ)

So, given that the firm is closing down two funds, we'll have to keep an eye out to see what other positions it might be liquidating, or exiting. Gendell & Tontine specialize in macro investing and take very large, concentrated positions in companies he feels will benefit from those macro themes. Additionally, when necessary, he will take on an activist role in order to ensure shareholder returns. The fund has posted returns in excess of 100% in both 2003 and 2005. Conversely, this year has been the year from hell for Tontine, and it announced that it would be closing two of its hedge funds: Tontine Capital LP and Tontine Capital Partners LP. Two of Tontine's funds will remain open: Tontine-25 and Tontine Financial.

It has definitely been an astonishing year for Gendell, whose Tontine firm is named after an annuity invented by Lorenzo de Tonti. In such an annuity, investors contribute and collect dividends. As investors each die off, their share is left to the remaining partners. Therefore, the last man alive receives all the money. Gendell's desire is clearly to be that 'last investor' remaining. Such a goal becomes slightly ironic when you consider his firm suffered monumental losses and almost 'died' this past year. Gendell explains the turmoil the firm faced in his October letter to investors (.pdf format).