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The manger of Pirate Capital, a so-called activist hedge fund, concedes he could have done a better job steering the $1.7 billion fund the past few months.

In a recent letter to Pirate investors, manager Thomas Hudson Jr. promises the fund will be more nimble in the future. Hudson made the remarks after poor performances by a number of big Pirate investments.

The Aug. 21 letter was sent to investors a week after

reported that

Pirate was barely in the black for the year after taking a drubbing in July.

"In July, we undertook a firm-wide review of our trading strategy, core and non-core investments, risk controls, and hedging strategies," the nine-page letter says. "We will now be even more selective when entering new positions and will cut losing positions more quickly."

Ever since it launched in 2002, Pirate's game plan has been to take big equity stakes in what it sees as underperforming companies and then aggressively lobby for share buybacks, management shakeups and corporate buyouts.

In the letter, Hudson says the year-to-date return for Pirate's four funds range from a gain of 3.2% to a loss of 2%. Historically, Pirate, based in Connecticut, has generated an average annual return of 28%.

"While our YTD returns are below our historical averages, contrary to some inaccurate reports in the media, our two flagship funds are positive for the year and our activist funds are down just 2% YTD," he writes.

In the letter, Hudson discusses several of Pirate's worst performing stocks in a lengthy section titled "shipwrecks." Some of those investments include big stakes in

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James River Coal




( CD) and

OSI Restaurant Partners

( OSI).

In fact, Hudson says Pirate recently sold its entire stake in OSI, the parent company of the Outback Steakhouse chain, after the firm's "investment thesis" didn't pan out. The hedge fund had been urging OSI's management to spin off some of its smaller brands.

Pirate, as of the end of June, reported owning 3.9 million shares of OSI. Shares of the restaurant chain closed Monday at $29.32, up 32 cents. The stock is down 15% since June 30.