| David Einhorn, Greenlight Capital (Bloomberg) |
The flagship long-short equity hedge fund managed by David Einhorn’s New York-based Greenlight Capital posted its second-straight monthly loss.
The fund, which is battling back from last year’s 20 percent loss, dropped 0.9 percent in September. This trimmed its gain for the year to 4.5 percent.
Still, the fund had gained nearly 2 percent for the quarter. But it is lagging the major indices. Through September, the Standard & Poor’s 500 stock index had returned 6.08 percent.
As in the second quarter, Greenlight in September seemed to be hurt in part by its short bets.
For example, shares of Pioneer Natural Resources, Greenlight’s so-called “mother fracker” stock that he singled out at an investment conference last year as a major short, gained 3.7 percent in September. Shares of healthcare computing services company Athenahealth, another well-documented Einhorn short, rose nearly 3 percent last month.
We don’t know exactly which stocks are in Greenlight’s so-called bubble basket, a collection of technology stocks that constitute another big short for the fund. But there is a good chance the hedge fund is still betting against online retailer Amazon.com. Greenight had noted in its second-quarter letter to investors that its bet against the stock was a source of losses in the June period. Amazon.com surged nearly 9 percent last month.
There also could be other undisclosed short bets that lost the fund money as well in September. For example, in its second-quarter letter, Greenlight noted that its biggest loser was an undisclosed fracking stock, not Pioneer. Perhaps this stock went up along with Pioneer in September as well.
Greenlight’s largest long holdings produced mixed results. Auto giant General Motors Co., its second-largest long, was essentially flat. AerCap Holdings, an aircraft leasing company and Greenlight’s third-largest U.S. long, dropped nearly 4 percent.
Apparel maker Michael Kors Holdings, the fund’s sixth-largest long, lost about 4.4 percent last month.
On the other hand, Consol Energy, Greenlight’s fourth largest U.S. long holding and its best-performing stock this year, rose 5.2 percent last month. The coal and natural gas company is up more than 135 percent this year through September.
Greenlight’s big bet on gold was roughly flat, rising less than 1 percent last month. For the year, however, it is still up more than 20 percent.
Apple, Greenlight’s largest U.S. long at the end of the second quarter, had a very good September. It returned 6.5 percent for the month. Media giant Time Warner added 1.5 percent.
As we previously noted, Greenlight established 12 new positions in the second quarter. However, none of them are major positions in the overall portfolio.
Meanwhile, Greenlight continues to maintain roughly the same exposure level it has had for several months. Entering October, at least one of its portfolios was 97 percent long and 72 percent short. This works out to a 25 percent net long exposure.
