market folly

(Note: Before reading this update, make sure you check out the preface to the series I'm doing on Hedge Fund 13F's here)

Well, its time for us to get a little peak at what the big boys have been up to over the past few months. While most 13f's won't come out until later in the week, Jeffrey Gendell's 13F is already out so let's get right to it. If you're unfamiliar with Gendell and his Tontine Partners, then here's what you need to know. Founded 11 years ago, Tontine is a $10 billion fund ran by Jeffrey Gendell. He specializes in macro investing and takes very large, concentrated positions in companies he feels will benefit from those macro themes. Additionally, he will take on an activist role when necessary, to ensure shareholder returns. The fund has posted returns in excess of 100% in both 2003 and 2005.

So, let's get right down to it... what was Jeffrey Gendell up to this past quarter? The following is Tontine Partners' current holdings as of June 30th 2008 as released in their most recent 13F filing with the SEC. I've compared the positions in this most recent 13F to last quarter's 13F and here's what the breakdown looks like:

New Positions: (in no particular order)
Altra Holdings (AIMC) 1,272,832 shares
American Elec Technologies (AETI) 14,899 shares
Argan (AGX) 161,033 shares
DST Sys (DST) 2,233,158 shares
Itron (ITRI) 704,758 shares
Ladish (LDSH) 877,751 shares
Peoples Community Bancorp (PCBI) 90,183
Tetra Tech (TTEK) 3,216,197 shares
Thermadyne Holdings (THMD) 1,152,168 shares
Thomas and Betts (TNB) 5,766,719 shares
YRC Worldwide (YRCW) 2,746,171 shares


Added to:
Chemtura Corp (CEM) increased position by 313%
Satcon Technology (SATC) increased position by 165%
JP MorganChase (JPM) increased position by 153%
LSB Industries (LXU) increased position by 113%
Goldman Sachs (GS) increased position by 109%
Emcor Group (EME) increased position by 70%
US Concrete (RMIX) increased position by 64%
Patrick Industries (PATK) increased position by 49%
Accuride Corp (ACW) increased position by 46%
Tierone Corp (TONE) increased position by 45%
Mastec (MTZ) increased position by 45%
Sterling Financial (STSA) increased position by 39%
Goodyear Tire (GT) increased position by 28%
Sun Micro (JAVA) increased position by 22%
Foster LB Co (FSTR) increased position by 22%
Maxwell Technologies (MXWL) increased position by 16%
KB Home (KBH) increased position by 15%
Beazer Homes (BZH) increased position by 13%
Gentek (GETI) increased position by 11%
Pulte Homes (PHM) increased position by 9%
Elmira Savings Bank (ESBK) increased position by 9%
MI Homes (MHO) increased position by 8%
Merrill Lynch 9MER) increased position by 7%
Brush Engineered Materials (BW) increased position by 6%
Twin Disc (TWIN) increased position by 6%
Synalloy (SYNL) increased position by 5%
Perini (PCR) increased position by 5%
Sun Bancorp (SNBC) increased position by 5%
Toll Bros (TOL) increased position by 3%
Polyone (POL) increased position by 2%
PAB Bankshares (PABK) increased position by 2%
US Airways Group (LCC) increased position by 1%
Tenneco (TEN) increased position by 0.66%
AZZ Inc (AZZ) increased position by 0.60%
QCR Holdings (QCRH) increased position by 0.11%
Preformed Line Products (PLPC) increased position by 0.03%


Reduced Positions:
National Penn (NPBC) reduced by 94%
Astoria Financial (AF) reduced by 90%
Beneficial Mut Bancorp (BNCL) reduced by 90%
Koppers Holdings (KOP) reduced by84%
New York Community Bancorp (NYB) reduced by 78%
Meritage Homes (MTH) reduced by 69%
Citizens Rep Bancorp (CRBC) reduced by 67%
BB and T (MSDXP) reduced by 66%
Community Bk Sys (CBU) reduced by 63%
Georgia Gulf (GGC) reduced by 60%
Firstfed Financial (FED) reduced by 59%
National City (NCC) reduced by 57%
Central Pac Finl Corp (CPF) reduced by 47%
Northwest Bancorp (NWSB) reduced by 45%
Susquehanna Bancshares (SUSQ) reduced by 45%
Powersecure Intl (POWR) reduced by 45%
Amcore (AMFI) reduced by 44%
Citigroup (C) reduced by 43%
Graftech (GTI) reduced by 42%
First Merchants (FRME) reduced by 42%
First St Bancorp (FSNM) reduced by 41%
US Steel (X) reduced by 37%
Ameriserv Financial (ASRV) reduced by 35%
Esmark (ESMK) reduced by 34%
DR Horton (DHI) reduced by 34%
Provident NY Bancorp (PBNY) reduced by 33%
1st Source (SRCE) reduced by 32%
US Lime and Minerals (USLM) reduced by 32%
Associated Banc Corp (ASBC) reduced by 32%
Meta Financial Group (CASH) reduced by 30%
Webster Financial Corp (WBS) reduced by 29%
Ryland Group (RYL) reduced by 29%
Laporte Bancorp (LPSB) reduced by 29%
KBR (KBR) reduced by 27%
Bank of America (BAC) reduced by 26%
TRC (TRR) reduced by 24%
Whitney Holding Corp (WTNY) reduced by 22%
Ameris Bancorp (ABCB) reduced by 22%
Columbus Mckinnon (CMCO) reduced by 21%
AK Steel (AKS) reduced by 18%
United Bankshares Inc (UBSI) reduced by 16%
M And T Bank Corp (MTB) reduced by 15%
Centex (CTX) reduced by 15%
Southern Mo Bancorp (SMBC) reduced by 15%
Downey Financial (DSL) reduced by 12%
Rurban Financial (RBNF) reduced by 12%
Independent Bk Corp Mich (IBCP) reduced by 12%
Colony Bankcorp (CBAN) reduced by 12%
Camco Financial (CAFI) reduced by 11%
North American Energy (NOA) reduced by 11%
Foster Wheeler (FWLT) reduced by 10%
Grupo TMM (TMM) reduced by 9%
URS Corp (URS) reduced by 8%
Champion Enterprises (CHB) reduced by 8%
Ohio Vy Banc Corp (OVBC) reduced by 7%
First Bancshares (FBMS) reduced by 7%
LNB Bancorp (LNBB) reduced by 7%
Metrocorp Bancshares (MCBI) reduced by 6%
Wesbanco (WSBC) reduced by 6%
MB Financial (MBFI) reduced by 5%
TF Financial (THRD) reduced by 5%
Monarch Community Bancorp (MCBF) reduced by 5%
Provident Financial (PROV) reduced by 4%
Shaw Group (SGR) reduced by 4%
Integra Bank Corp (IBNK) reduced by 4$
Oreleans Homebuilders (OHB) reduced by 3%
Tradegar (TG) reduced by 3%
Iberiabank (IBKC) reduced by 3%
Teche Holding (TSH) reduced by 3%
First Financial Svc Corp (FFKY) reduced by 2.5%
Independence Fed Savings Bank (IFSB) reduced by 2%
HMN Financial (HMNF) reduced by 2%
Centrue Financial (TRUE) reduced by 2%
Mid South Bancorp (MSL) reduced by 2%
1st Independence Financial (FIFG) reduced by 2%
Princeton National (PNBC) reduced by 1.5%
Fidelity Bancorp (FSBI) reduced by 1.5%
Lincoln Bancorp (LNCB) reduced by 1.5%
Ameriana Bancorp (ASBI) reduced by 1.4%
Timken (TKR) reduced by 1.2%
CFS Bancorp (CITZ) reduced by 1.11%
MFB Corp (MFBC) reduced by 0.88%
Park Bancorp (PFED) reduced by 0.82%
First Defiance Financial (FDEF) reduced by 0.79%
Central bancorp (CEBK) reduced by 0.72%
Mutualfirst Financial (MFSF) reduced by 0.72%
Hexcel (HXL) reduced by 0.55%
Hawthorn Bancshares (HWBK) reduced by 0.43%
Citizens First Bancorp (CTZN) reduced by 0.4%
River Valley Bancorp (RIVR) reduced by 0.3%
First Keystone Financial (FKFS) reduced by 0.2%
First Banctrust (FBTC) reduced by 0.2%
Northeast Bancorp (NBN) reduced by 0.2%
New Hampshire Thriftbancshares (NHTV) reduced by 0.16%
Community Cap Corp (CPBK) reduced by 0.14%
Parkvale Financial (PVSA) reduced by 0.1%
Capital Bank Corp (CBKN) reduced by 0.1%
Premier Financial Bancorp (PFBI) reduced by 0.1%
HF Financial (HFFC) reduced by 0.1%
Provident Community Bancshares (PCBS) reduced by 0.05%
Southern Community Financial (SCMF) reduced by 0.05%
PVF Capital (PVFC) reduced by 0.01%
LSB Corp (LSBX) reduced by 0.01%


Removed Positions:
Positions Tontine Partners sold out of completely
American International Group (AIG)
Banctrust Financial Group (BTFG)
BCSB Bankcorp (BCSB)
BNC Corp (BNCC)
Capital Corp of the West (CCOW)
Capital One (COF)
Chart Inds Inc (GTLS)
City Hldg Co (CHCO)
Comerica (CMA)
Dime Community Bancshares (DCOM)
FNB Corp (FNBN)
First Niagara Financial (FNG)
Fox Chase Bancorp (FXCB)
Headwaters (HW)
Huntington Bancshares (HBAN)
Independent Bk Corp (INDB)
Instituform Technologies (INSU)
K Tron (KTII)
Mainsource Financial Group (MSFG)
MBIA (MBI)
Mercantile Bk Corp (MBWM)
Navigant Consulting (NCI)
Olin Corp (OLN)
Peoples Bancorp Auburn
Peoples Utd Financial (PBCTD)
PFF Bancorp (PFB)
Pinnacle Bankshares (PLE)
PNC Financial Services (PNC)
Powell Industries (POWL)
Quality Distr Inc (QLTY)
Sovereign Bancorp (SOV)
Standex International (SXI)
Superior Bancorp (SUPR)
Team Ag (TISI)
Tetra Technologies (TTI)
Wachovia (WB)
Washington Mutual (WM)
Willow Financial (WFBC)
Yadkin Finl Corp (YAVY)


Positions with no change:
Ada Es Inc (ADES)
Cleveland Cliffs (CLF) - 2 for 1 Stock Split (did not increase holding)
Advanced Energy Inds (AEIS)
Ameron (AMN)
AMR Corp (AAR)
Astec Industries (ASTE)
Badger Meter (BMI)
Baker Michael Corp (BKR)
CCF Holding Co (CCFH)
Ceco Environmental (CECE)
Channell (CHNL)
Comfort Sys (FIX)
Community Cent Bank Corp (CCBD)
Community Shores Bank Corp (CSHB)
Cooperative Bankshares (COOP)
Core Molding Technologies (CMT)
Dearborn Bancorp (DEAR)
Dycom (DY)
Ecology and Environment (EEI)
Enersys (ENS)
Englobal (ENG)
Esco Tecnologies (ESE)
Exide Technologies (XIDE)
Ferro Corp (FOE)
Fidelity Southern (LION)
First community Corp (FCC))
First Fed Northern Michigan Bancorp (FFNM)
First Franklin Corp (FFHS)
Furmanite Corp (FRM)
Gehl (GEHL)
Great Lakes Dredge and Dock (GLDD)
Greenbrier Cos (GBX)
Hardinge (HDNG)
Hawkins (HWKN)
Hopfed Bancorp (HFBC)
Horizon Bancorp (HBNC)
Innospec (IOSP)
Insteel (IIIN)
Internet Cap Group (ICGE)
Jacksonville Bancorp (JAXB)
Jefferson Bancshares (JFBI)
KMG Chemicals (KMGB)
Landmark Bancorp (LARK)
LCC Intl (LCCI)
Magnetek (MAG)
Material Sciences (MSC)
Matrix Service Co (MTRX)
MBT Financial (MBTF)
Meadow Vy Corp (MVCO)
Met Pro (MPR)
MFRI (MFRI)
Nacco (NC)
National Technical (NTSC)
North Central Bancshares (FFFD)
Ohio Legacy (OLCB)
Otter Tail (OTTR)
Peoples Bancorp of North Carolina (PEBK)
Perma Fix Environmental (PESI)
Pike Elec (PEC)
Portec Rail (PRPX)
Quanta Services (PWR)
Shiloh (SHLO)
Sifco (SIF)
Smith A O (AOS)
Supreme Industries (STS)
Tower Financial (TOFC)
Trinity Industries (TRN)
United Bancshares (UBOH)
Versar (VSR)
Wabash National (WNC)
Westmoreland Coal (WLB)


Top 10 holdings by % of portfolio:
1. X (Top Holding)
2. CLF
3. KBR
4. PWR
5. AKS
6. SPY
7. XIDE
8. SGR
9. TRN
10. FWLT

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Breakdown: Tontine Partners' 13F can be summed up in 3 words: Regional Bank Clusterf*ck. He has a ton of them, but they aren't very big positions relative to his whole portfolio. For the most part though, Gendell was selling all his financials, including the regionals. The only major financial plays he has left anyways are smaller positions. And, his only positions of major size in that sector are through calls. So, I'd have to think that he saved himself some serious money by exiting/reducing a number of those regional positions, as they could have really put him in the house of pain. It should be noted that he made large additions to the big banks such as JPM and GS.

The next major trend I noticed in his portfolio was that he is highly levered up with steel holdings. While he did do some position size reducing across a few of his steel names (X, AKS), one still has to wonder how he's faring right now given the recent selloff in steel? Whether he has sold anymore substantial positions is the real question. Because, if he hasn't, the recent drop in steel stocks has undoubtedly affected his portfolio in a negative way. Although he did reduce his position sizes.... he still has MASSIVE stakes in the steel names. After all, the top 2 holdings of his fund (and 3 out of the top 10 holdings) as of June 30th were steel stocks. So, he definitely profited handsomely from these steel names by nearly top-ticking the market, selling huge chunks before the peak in July. But, he's since given back much of these gains, assumming he still holds the steel names. This is actually a very unique situation where his 13F doesn't really help us. These holdings were as of June 30th and that was conveniently around the same time steel stocks started topping out. So, the real action in the steel names has been occuring outside of the time period the 13F covers (ie: the past month and a half). And, he is either taking a lot of pain from these massive steel holdings, or he has been partly responsible for the massive selloff in the steel names. We can only guess at this point. We'll have to wait until the next round of filings to find out what he's been up to, unfortunately. The timing overlap on this situation really prevents us from gaining much insight.

But, from this past quarter, we can take away the fact that Gendell definitely had strong conviction in steel and infrastructure names. After all, practically all of his top 10 holdings are concentrated in those 2 sectors. One other top 10 holding I wanted to touch on though is his #4 holding, Quanta Services (PWR). This chart has been breaking out and I have seen this name popping up more and more around financial sites. Plus, it fits right into his whole infrastructure theme. So, it doesn't surprise me at all to see that Gendell has already been in this name for quite some time. After all, he's a pretty smart guy. (Keep in mind: although some of these top holdings are indeed large stakes, some/many have experienced price appreciation, boosting their % share of the portfolio even more.)

Tontine Partners' most interesting move(s)? Whatever he has done in the past month and a half that we can't see. No joke. Since such a massive allocation of his portfolio was dedicated to steel stocks, his fund's performance has no doubt been affected by whatever decisions he has made recently. If he has been one of the many selling steel names, then he is in great shape. If not, then he's screwed. Us plebeians will have to wait until the next round of 13F's to find out Gendell's steel fate.

13F Source: SEC

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Check back in during the coming weeks as I analyze the portfolio changes to numerous big name hedge funds such as Lone Pine Capital (Steve Mandel), Moore Capital Management (Louis Bacon), Tudor Investment Corp (Paul Tudor Jones), Blue Ridge Capital (John Griffin), & many many more.