Jeffrey Gendell is back.
The founder of Greenwich, Connecticut-based Tontine Associates reports in a May 21 regulatory filing that he has raised a total of more than $12 million from 63 investors for his new Tontine Total Return fund, though sources close to Gendell say the figure is much higher - perhaps as much as $500 million, including $300 million from one investor.
All the money for the new fund, which launched this spring, comes from clients who lost big last year, when most of Tontine’s funds declined by 65 to 75 percent, according to a source at the firm, although one published report says Tontine Partners plunged by more than 90 percent.
Little has been disclosed about Tontine Total Return, and Gendell, 50, won’t comment. However, sources familiar with it say that the new fund, which will be open to new investors on July 1, will be managed more conservatively and with less leverage than the Tontine funds that imploded last year. It will charge a 1 percent management fee and a 20 percent performance fee, but — as an incentive — it will honor the original high-water mark of investors who switch from Tontine’s depressed funds. Some say Gendell has told investors he will eventually close two of the funds, Tontine Capital Partners and Tontine Partners.
By switching to the new offering, investors who stay with Tontine can recover at least some of their losses. Through May, Tontine Capital Partners was up by more than 28 percent year-to-date, thanks in large part to a 38 percent gain in April. Another of Gendell’s funds, Tontine-25, was up more than 72 percent this year through May. Even so, Tontine is just a shadow of its former self and is facing the sobering fact that being down 80 percent one year means you have to be up 500 percent the next just to get back to where you started.
The raw numbers illustrate it better than words. At the end of the first quarter of this year, the value of Tontine’s equity portfolio had fallen to $577 million from $10.6 billion in June 2008. In a letter to investors, Gendell blamed the nightmarish performance on what he called a “once in 13 years” event.
