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Einhorn’s Greenlight Capital Had Impressive Gains in H1

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Greenlight Capital’s performance

After having the worst year in 2018, David Einhorn’s Greenlight Capital (GLRE) had a promising performance in the first half of 2019. As reported by Bloomberg, Greenlight Capital gained 1.3% in June, which took the gains for the first half of 2019 to 18%.

Greenlight Capital is focusing on fewer names and its highest conviction bets. In the first half of 2019, Greenlight Capital almost matched the S&P 500’s (SPY) gains of 18.3%. The company outperformed the Dow Jones Industrial Average (DIA), which has returned 14.5%. Greenlight Capital is trailing the NASDAQ Composite (QQQ), which has returned 22.7% during the same period.

Bloomberg reported that “the HFRX Global Hedge Fund Index, an early indicator of industry performance, rose about 1.5% this month through Thursday, bringing year-to-date returns to 4.1%.”

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Einhorn’s top gainers

At the end of the first quarter, Greenlight Capital’s three largest positions were:

  • General Motors (GM) accounted for 24.03% of the portfolio.
  • Green Brick Partners (GRBK) accounted for 14.99% of the portfolio.
  • AerCap Holdings (AER) accounted for 13.76% of the portfolio.

Read Could Einhorn’s Top Positions Turn His Fund’s Performance Around? to learn more about Greenlight Capital’s positions at the end of the first quarter. We discussed how the positions contributed to the fund’s gains.

In the first half of 2019, General Motors, Greenlight Capital’s largest stock holding, has returned 15.2%. Green Brick Partners and AerCap Holdings have returned 14.8% and 31.3%, respectively, in the first half of 2019.

Short positions

In addition to Greenlight Capital’s long positions, its short positions are also working in its favor in 2019, especially its much-publicized Tesla (TSLA) short. While Tesla stock has gained 20.7% in June, it has lost ~33% in the first half of 2019, which contributed to Greenlight Capital’s gains. In June, media reports about Tesla’s improving car production helped the company regain investors’ confidence and drove its stock higher. On June 11, Tesla’s CEO, Elon Musk, denied reports about the company’s car demand problems, which helped the stock rise.

Greenlight Capital also has a “bubble basket” short and Netflix (NFLX) put options. Netflix stock has risen 39% in the first half of 2019, which isn’t helping Greenlight Capital. Previously, Einhorn criticized Netflix for not being able to convert subscribers to cash.

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