Whitney Tilson’s T2 Partners got burned during the fourth quarter of 2010, losing 3.3%. More than half of the fourth quarter loss was in October. Netflix (NFLX) was T2 Partners’ biggest loser in 2010 even though Tilson trimmed the short position and replaced part of it with put options. Currently Tilson’s T2 Partners is 100% long and 60% short, with a net exposure of 40%. However, his short book had a much higher beta than his long book.
T2 Partners returned 10.3% in 2010, underperforming the S&P 500 index by nearly 5 percentage points including dividends. This doesn’t necessarily mean that they don’t have alpha. In fact, Insider Monkey, your source for free real time trading data, calculated Whitney Tilson’s alpha (we used most of his 2010 returns as well) to be around 4.5% during the past three years. Later, we’ll be discussing T2 Partners’ investor letter.