David Einhorn’s Greenlight Capital returned 1.6% last year after fees, compared to a 21.8% gain in the S&P 500, according to a fourth-quarter letter seen by Business Insider.
Greenlight lost 1.6% in the fourth quarter last year, compared to a 6.6% gain in the S&P 500 over the same period.
In the January 16 letter, Greenlight said it was frustrated by the underperformance.
“As we were in the batter’s box so to speak, it felt like we were swinging well and hitting the ball hard. We just didn’t deliver a satisfactory result on the scoreboard.”
The letter added:”While it feels like we have been running face first into the wind, we don’t intend to capitulate and are sticking to our strategy of being long misunderstood value and shorting ‘not value.'”
A spokesman for Greenlight declined to comment.
Greenlight took a large stake in Brighthouse Financial (BHF) at an average of $US57.92 a share, according to the letter:
“On BHF, analysts are laser focused on the downside from a bear market. That seems too pessimistic. The converse of the downside of adverse capital markets is the upside to favourable markets. The flow-through from favourable capital markets, possibly combined with better-than-forecasted execution typical of spin-offs of this type, should yield an ability to return capital much sooner than expected. With the shares trading at approximately a 40-50% discount to similar companies with normal capital return policies, there is plenty of upside to the shares as the market begins to discount normalization.”
Greenlight also took a small position in Twitter (TWTR) at an average price of $US21.59, the letter said. The hedge fund is bullish on Twitter, saying that new management at the company improved Twitter’s user experience last year, leading to an increase in the number of Twitter users and time spent on the social media site.
“We believe TWTR will have a pitch to advertisers in 2018, which should lead to revenue growth,” Greenlight said. “Restructuring actions taken over the past year will allow much of the revenue to fall to the bottom line, and we expect TWTR to begin to close some of the 25% margin gap vs. its social media peers.”
Greenlight’s other positions include:
- Ensco, an operator of offshore rigs (ESV).
- A repurchased stake in Time Warner (TWX).
Greenlight also dropped several positions in the fourth quarter, including:
- VanEck Vectors Gold Miners ETF (GDX) at a loss. “We still continue to hold gold but have decided we don’t need additional exposure to mining equities to express that view,” the letter said.
- Hewlett Packard Enterprise (HPE) at a small gain.
- Rite Aid (RAD), which was one of Greenlight’s worst investments last year.
- a short in Deere & Company (DE).
A the end of 2017, Greenlight’s largest disclosed long positions were AerCap, Bayer, Brighthouse Financial, General Motors and gold.