September 28, 2017 / 4:16 PM / a year ago

Whitney Tilson to shut hedge fund, blames market 'complacency'

(Reuters) - Whitney Tilson is closing his hedge fund Kase Capital, and will return capital to investors, he said in a letter to clients.

Tilson cited “high prices and complacency that currently prevail in the market” as main reasons for shutting down his fund.

“Historically, I have invested in high-quality, safe stocks at good prices as well as lower-quality ones at distressed prices,” Tilson wrote to clients on Sunday.

“... However, my favorite safe stocks (like Berkshire Hathaway and Mondelez) don’t feel cheap, and my favorite cheap stocks (like Hertz and Spirit Airlines) don’t feel safe. Hence, my decision to shut down.”

Kase Capital follows a spate of other notable funds that have gone out of business this year, including Eric Mindich's Eton Park Capital Management, and John Burbank's Passport Capital, which recently announced plans to shut its long-short equity fund.

Tilson was in a two-year-long headlock with Lumber Liquidators Inc, accusing the retailer of selling flooring laced with cancer-causing materials.

The scandal prompted Lumber’s chief executive, Robert Lynch, to step down in May 2015.

Tilson reaped millions from his bet against Lumber, whose shares were down 90 percent at one point.

Reporting By Aparajita Saxena in Bengaluru; Editing by Maju Samuel

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