Value investor Whitney Tilson, the co-founder of hedge fund T2 Partners, revealed in a mass email Monday that his fund just went long Barnes & Noble last week after being short.
His trade displayed incredible timing because Microsoft announced on Monday it had invested $300 million in a joint venture with the bookseller causing Barnes & Noble’s stock price to skyrocket.
Tilson detailed a few reasons for why his fund decided to go short-to-long on the stock and one reason in particular really stood out to us — he saw a bull case posted on a private website called Value Investors Club, a place where people post different investment ideas.
We decided to find out more about this private investing site so we spoke with one of the co-founders and took a peek at the site ourselves using a guest login.
John Petry, the site’s co-founder along with Joel Grenblatt, told Business Insider they came up with the idea more than 10 years ago because they had difficulty finding high quality investment idea write-ups and thoughtful analysis online.
“The idea is that there’s a lot of stuff on the internet and a lot of it’s not very good, so me and my partner started the site about a decade ago to try and just limit it to really high quality,” Petry, who is also a partner with hedge fund Gotham Partners, said in a telephone interview.
We checked out the site and it looks very similar to a message board where anonymous users post their ideas, which are ranked and commented on by other users. All investment ideas posted on the site are rated on a scale of 1 to 10 with the latter being the highest.
We found the long Barnes & Noble case Tilson referred to for his investment idea. It was posted on Sunday April 22nd by a user named “Rotin” and had a user rating was a 4.4 by 26 users, according to the site. What’s more is in the comments section, there are congratulatory remarks about the excellent timing of the post because the bookseller and Nook-maker’s stock surged this week on the Microsoft joint venture news.
Membership to this exclusive club doesn’t cost a thing and it allows a person to have access to everyone else’s investment ideas posted in real-time.
In order to stay in the club, however, all members are obligated to post two investment pieces per year and also rate 20 investment ideas from other users, Petry explained.
Not everyone can be a member of the Value Investors Club. In fact, Petry said there’s a “very rigorous” application process to obtain membership.
“You have to post a very good investment write-up that’s a good idea and well written,” he said, adding, “Most applications don’t reach that threshold.”
We know Tilson uses the site, but Petry declined to name other names. However, he said there’s “a lot of very well known money managers” and “very, very successful hedge fund managers” who all use the site.
“Everyone on the site is anonymous,” he said, “It’s a true meritocracy.”
According to Petry, membership was originally capped at 250. He said today they have gone over that number, but haven’t sat down to count them all to provide a specific number.
“We have several hundred members,” he said. “We don’t want to have a lot. We aren’t trying to gather a lot of members — just really good members for the site.”