David Einhorn’s Greenlight Capital surged 3.6 percent in May. As a result, the New York hedge fund firm is back in the black, up 1.4 percent for the year.
The Standard & Poor’s 500 was up 1.1 percent for the month.
Greenlight’s strong performance came despite the firm’s being only modestly exposed to the long side.
The firm entered May 107 percent long and 93 percent short, or just 14 percent net long.
Entering June, Greenlight slightly trimmed its net long exposure; it was roughly 101 percent long and 88 percent short, which works out to just 13 percent net long.
As is usually the case, we don’t know exactly what contributed to Greenlight’s May performance. However, Greenlight seemingly enjoyed strong contributions from a variety of sources.
Its performance seems to have been partially driven by its high-profile short of fracking companies. You may recall that at the beginning of May, Einhorn said at the Sohn Investment Conference that these stocks can “contaminate portfolio returns.”
He especially beat up on Pioneer Natural Resources Co., asserting its discounted cash-flow value was roughly half its market value. Sure enough, its stock fell more than 14 percent in May.
Greenlight also made money on each of the three new long positions it established in the first quarter.
Chicago Bridge & Iron Co. surged nearly 14 percent last month, to $54.26. Greenlight says it paid an average price of $42.93 for the engineering and construction firm, which has a big exposure to the energy sector. So, it looks so far like a nice winner. At the end of the first quarter, it was the firm’s sixth-largest long stock position.
Another of the new positions — General Motors Co. — was up about 2.5 percent last month, to $35.96, after dropping 6.5 percent in April. The stock is trading above Greenlight’s average purchase price of $34.62.
AerCap Holdings, the aircraft leasing giant that was also added to the portfolio in the first quarter, rose 3.4 percent in May, to $48.24, despite a 1.3 percent decline on Friday.
Greenlight’s largest disclosed long positions, however, enjoyed mixed results last month.
In addition to gains from GM, its fifth-largest stock position at the end of the first quarter, Greenlight saw gains from Apple, its largest long position. The maker of iPads and iPhones rose about 4.4 percent for the month. In the first quarter the hedge fund firm trimmed its position by about 13 percent.
SunEdison, Greenlight’s third-largest individual long stock position, surged more than 18 percent last month even after falling about 3.5 percent on Friday, the last trading day of the month.
On the other hand, Consol Energy, Greenlight’s fourth-largest long, plunged 14 percent last month alone.
Micron Technology, its second-largest long, fell a little less than 1 percent, while the price of gold slipped more than 2 percent last month.