Greg Bylinsky, Jeff Gramm, and Bandera Partners

New York-based Bandera Partners was founded by Greg Bylinsky and Jeff Gramm in 2006. Bandera Partners is a value-oriented hedge fund. Previously Bylinsky, 45, was a portfolio manager at Lime Capital Management, focusing on value investing and special situations. Between 1998 and 2000, he worked at Tower Research Capital. Bylinsky has a B.A. from Yale and a J.D. from Harvard Law (1994). After graduation Bylinsky practiced law for four years at Kaye Scholer LLP.

Prior to founding Bandera Jefferson Gramm worked at Arklow Capital, focusing on distressed and value investments. Thirty-five year old Gramm received an MBA from Columbia University in 2003 and a B.A. from the University of Chicago in 1996.

During the first quarter Bandera Partners sold its Carrols Restaurant (TAST) stock which was a small position. Bylinsky and Gramm initiated brand new positions in Microsoft (MSFT), General Motors (GM), and Warner Music Group (WMG). We don’t think they have a specific edge on mega-caps MSFT and GM. We are more interested in Hilltop Holdings (HTH) and AFC Enterprises (AFCE) where they increased their bets significantly. We are also interested in their top two stock picks: Star Gas Partners (SGU) and Assisted Living Concepts (ALC). Here is how their portfolio performed since the end of first quarter:

The value weighted return of Bylinsky’s portfolio was -4.3% since the end of first quarter, vs. -1.8% for the SPY. The only stock Bylinsky sold entirely during the first quarter gained 9.5% whereas his largest position lost 5% and his second largest position plunged more than 13%. The two stocks we were most interested in, HTH and AFCE, had a mixed performance. HTH lost 11% while AFCE gained 9%. Richard Chilton had more than $30 Million in AFCE and billionaire Jim Simons’ Renaissance had $6 Million.

Even though Bandera Partners haven’t performed better than the market, we like their approach and “concentrated bets” philosophy.