Hedge fund billionaire David Einhorn used a bunch of New Yorker cartoons to explain why 2018 was such a brutal year

Getty Images EntertainmentDavid Einhorn’s Greenlight Capital wasn’t ‘right about anything’ in 2018, he said.
  • David Einhorn’s annual presentation to Greenlight Capital investors called 2018 “the year we weren’t right about anything.”
  • Greenlight, which has fallen to roughly $US5 billion in assets as investors left the fund because of poor performance, finished 2018 down 34%, but it is off to a good start in 2019.
  • The presentation, given at the end of January, features cartoon strips and New Yorker comics to describe the firm’s feelings on investments such as Tesla, General Motors, and Brighthouse Financial.

The billionaire David Einhorn’s Greenlight Capital has battled outflows and poor performance over the past several years, knocking his fund down to about $US5 billion in assets from more than $US12 billion.

Last year was the biggest knock yet, as Einhorn described in a January 22 presentation to investors. The fund lost 34% in 2018, which Einhorn called “the year where we didn’t get anything right.”

The 96-slide presentation details investments that went awry, staffing changes, expectations for 2019, and more – all summarized by New Yorker cartoons.

Below is a summary of Einhorn’s presentation with the comics he selected.

A tough 2018

Einhorn bigger picGreenlight Capital partner presentationEinhorn’s ‘cartoon of the year’ for 2018, when he lost 34%.

According to a chart in the presentation, Greenlight finished only two months – May and October – with positive returns while ending five months with losses of 6% or worse.

Within Einhorn’s portfolio, both the short and long positions lost money. Short positions in Netflix and Tesla clipped returns, and December’s market rout hurt several stocks like General Motors and Brighthouse Financial that Einhorn was bullish on.

Tesla short

Einhorn TeslaGreenlight Capital partner presentationEinhorn’s commentary on Tesla’s board.

Tesla’s bumpy ride through 2018 – which included the company’s CEO and founder, Elon Musk, smoking weed on a podcast and also relinquishing the chairman position after regulators accused him of misleading investors on Twitter – was tough on Einhorn, who shorted the stock several times in 2018.

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A slide in the presentation shows that Greenlight shorted the stock after Musk settled with the Securities and Exchange Commission in late September only to see the stock price jump on the company’s positive third-quarter earnings and sales numbers.

The presentation said Einhorn would continue to have a short position on the car manufacturer in 2019.

Musk has railed against short-sellers in the past, claiming they are out to get him and once tweeting that short-selling “should be illegal.”

Tesla did not immediately return requests for comment.

Loading up on GM

Einhorn GMGreenlight Capital partner presentationGeneral Motors’ bumpy ride in 2018 hurt Greenlight investors.

General Motors has begun to shift into the latest fads in transportation, like electric and driverless cars, but 2018 was a hard year for the automaker. There were layoffs and plant closings, and the stock suffered because of it.

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Einhorn, who is still heavily invested in GM in 2019, cites the progress the company has made on automated driving technology as one of the reasons he’s staying with the stock instead of cutting his losses.

A spokesman for GM declined to comment.

Greenlight’s 2019 internal changes

Einhorn 2019Greenlight Capital partner presentationA little therapy for Greenlight after 2018.

Greenlight is undergoing some changes in 2019. The firm plans to begin accepting new capital starting in March, the presentation said, after being “closed since 2000, with six periodic capital openings.”

“We don’t believe there is a risk of our assets growing too quickly (other than through better performance),” a slide said.

The presentation also mentioned the firm’s new chief compliance officer, Steven Rosen, who was previously the chief compliance officer for Citadel’s Surveyor Capital unit for six years. The firm also added three new research analysts at the end of last year, the presentation said.

Einhorn’s ‘2020 vision’

Einhorn 2020Greenlight Capital partner presentationEinhorn’s last cartoon of his latest annual partner presentation.

It’s unclear whether Einhorn picked this cartoon because of the 2020 presidential election or his future, but one of the last slides of the long presentation let partners know that he thinks there won’t be a lot of openings for a “wise person” in the future.

Einhorn has given money to Democrats in the past, though he cohosted a fundraiser for the bipartisan Keep America Competitive PAC in 2012 with a fellow billionaire, Leonard Tannenbaum. One of his most recent political contributions, in 2018, was for the independent US Senate candidate Neal Simon of Maryland, who is also a financial adviser.

A spokesman for Greenlight could not be reached for comment.

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