Tourbillon Hedge Fund Wins Shorting MannKind, GT Advanced SharesKelly Bit and Arie Shapira
Tourbillon Capital Partners LP, the hedge fund started last year by Jason Karp, said investments betting against MannKind Corp. and GT Advanced Technologies Inc. paid off as shorting stocks contributed most to its profits last quarter.
MannKind, which makes inhalable insulin that Tourbillon believes will struggle commercially, fell 46 percent in the third quarter. This helped produce a 71 percent return for New York-based Tourbillon, Karp wrote in a letter to investors, a copy of which was obtained by Bloomberg News. The firm, which manages $1.3 billion, said the stock should fall to $1 from about $6.
GT Advanced filed for bankruptcy this month without specifying why. The company lost a bid to keep an executive’s description of the circumstances surrounding its bankruptcy under seal, endangering a settlement with Apple Inc., with which it had an agreement to supply the synthetic sapphire it uses in screens of mobile devices.
Tourbillon’s main fund rose 8.7 percent this year through September, according to the letter, after gaining 21 percent in 2013. Karp said his firm has outperformed average hedge funds, which do not deserve to charge “premium fees for an inferior product.”
“I have a paradoxical disdain for the hedge fund industry at large,” Karp wrote. “The growing negative sentiment for the ‘industry’ relates to the high fees charged for an inferior product that is becoming more and more like (correlated to) the broad indices without any alpha (demonstrated skill).”
Karp started Tourbillon after he was co-chief investment officer at Carlson Capital LP. Before that, he was director of research and money manager of global equities at CR Intrinsic Investors, a unit of Steven Cohen’s former hedge-fund firm SAC Capital Advisors LP.
Karp wrote that Tourbillon is reopening now to take in a limited amount of capital. The firm was planning this for Jan. 1, but given “hedge fund unwinding and dislocations,” the current opportunity is exciting, he wrote.
Amy Zipper, chief operating officer at Tourbillon, declined to comment on the letter.