Whitney Tilson To Close Kase Capital Management Hedge Fund

Sep 28 2017 | 10:22pm ET

Value investing specialist Whitney Tilson is reportedly shuttering a hedge fund run by Kase Capital Management after a string of disappointing returns, the latest manager to exit the space after being unable to reverse persistent losses. 

Tilson will return the fund's capital to investors, according to a Bloomberg article citing a email Thursday with excerpts from an investor letter he sent last Sunday. Details about timing were not immediately available. 

Noting that “reporting sustained underperformance…was making me miserable,” Tilson said he could not in good conscience continue managing outside capital without a high degree of confidence he could improve returns within a reasonable period, the letter added. 

Kase is down approximately 8% for the year to date, compared with a total return in the S&P 500 of 13.6%. Assets have declined to $50 million, the article continued, and although Tilson has worked through difficult stretches before, he was always confident of a turnaround. Not this time - noting the environment of “high prices and complacency” that characterizes the current environment, Tilson said in the investor letter that his “favorite safe stocks no longer feel cheap and [his] favorite cheap stocks don’t feel safe.”

A value-oriented long/short equity manager with an occasional activist bent, Tilson historically bought high quality blue chips at attractive prices and lower-quality shares at distressed levels. 

While Tilson expects to remain connected with the investment industry, he will not manage outside capital, the letter also said.

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