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Tags: david einhorn | greenlight | stocks | investing

David Einhorn Delivers Another Disappointing Month to Investors

(© Jose Carlos Rojas Villarreal/Dreamstime)

By    |   Thursday, 01 February 2018 05:57 PM EST

David Einhorn's Greenlight Capital missed out on the best January for stock investors in two decades, The Wall Street Journal reported. 

Greenlight Capital Offshore declined 6 percent in January, while the Greenlight Capital LP fund dropped 6.6 percent, an unnamed source familiar with the returns told CNBC.

That had to hurt, considering anybody holding a low-cost S&P 500 index fund reaped a tasty gain.

The stock benchmark rose 5.6 percent last month, the best "January effect" since 1997 — when the dot-com bubble was still going strong. 

The weak monthly return prolongs Einhorn's poor performance from last year. Greenlight Capital didn't even keep up with inflation with its 1.6 percent gain in 2017, compared with a 19.4 percent gain for the S&P 500, an investor letter said.

His short sales really got shafted. Short selling makes money when stocks decline, but that strategy was a big loser for Greenlight.

"The biggest losers for the year were our short positions on the 'bubble basket' and Caterpillar," he wrote in his annual letter to clients on Jan. 16. "It's tough to look at full year losses on Amazon (+56%), athenahealth (+26%), Netflix (+55%) and Tesla (+46%) when we believe all those stocks appeared priced with little margin for error entering the year, and none executed well or met fundamental expectations in 2017."

Amazon rose 24 percent, athenahealth dropped 6 percent, Netflix rallied 41 percent and Tesla gained 14 percent in January. If Einhorn held those short positions, then that may explain Greenlight's losses.

The decline means Greenlight has to work harder to reach its high-water mark, where gains make up for declines. Greenlight has lost more than 10 percent since 2014 through the end of last year, compared with a 38 percent total return in the S&P 500 for the same period.

Some investors wisened up and pulled their funds from Greenlight last year, the Wall Street Journal reported in July.

Greenlight was forced to pay back more than $400 million in client withdrawals at midyear, as more than 15 percent of eligible investors chose to redeem their money, people close to the hedge fund told the newspaper.

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StreetTalk
David Einhorn's Greenlight Capital missed out on the best January for stock investors in two decades, CNBC reported.
david einhorn, greenlight, stocks, investing
355
2018-57-01
Thursday, 01 February 2018 05:57 PM
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