Greenlight Capital got off to a strong start in 2024.
The hedge fund firm run by David Einhorn posted a 3.9 percent gain in January, according to someone who has seen the results. This compares with a 1.6 percent gain for the S&P 500 and a 1 percent increase in the Nasdaq Composite after it lost more than 2 percent on Wednesday.
As is always the case, it’s not clear exactly what drove the results. Greenlight entered January with a 188 percent gross exposure and a 48 percent net long. The value-driven fund was most likely boosted, in part by positions other than long positions in common stocks. Four of the five largest disclosed long positions as of year-end were either flat or down for the month.
Home building and land development company Green Brick Partners, Greenlight’s largest long at the end of September — the most recent period for which this data is available — was down less than 1 percent in January. The stock surged by 114 percent in 2023, making it the firm’s biggest winner after being the biggest loser the previous year, according to the hedge fund’s fourth-quarter letter.
Brighthouse Financial, a marketer of annuities and life insurance, also fell by less than 1 percent in January. No. 2 long CONSOL Energy, a coal producer, was off by nearly 6 percent. The stock benefited last year from the company’s emphasis on stock repurchases, Greenlight said in the letter, noting that at year-end, it was trading at just 5.8 times 2024 estimates.
Meanwhile, Kyndryl Holdings, an information technology infrastructure services provider, was down 2.7 percent for January. The company, which is a spinout of IBM, trades at just five times what Greenlight believes it could earn if it improved its margins.
Vitesco Technologies was the only top-five disclosed position to be in the black for the month, up 4 percent. It is a German automotive supplier of electrified technologies.
Tenet Healthcare, an operator of hospitals and ambulatory-surgery centers, was up 9.5 percent for the month after jumping more than 40 percent in the final two months of the year. “The shares recovered late in the year, particularly after the company sold three hospitals at a premium valuation, which caused the market to rethink the value of the remaining business,” Greenlight explained.
In the fourth-quarter letter, the firm said it had established medium-size positions in Alight, a software-based provider of health and wealth benefits and payroll solutions for large enterprises, and Viatris, a manufacturer of generic and off-patent branded drugs. In January, the stocks rose 4.7 and 8.7 percent, respectively.
Institutional Investor reported previously that in the letter Greenlight told clients it had established a major new position that instantly landed among its top-five holdings — but declined to disclose the company’s identity. It still hasn’t revealed the position, so how the stock impacted January results is unknown.
Greenlight also said that in the fourth quarter it had become a commodity pool operator and registered with the U.S. Commodity Futures Trading Commission. The firm stressed, however, that it does not expect registration to cause a material change in portfolio construction; rather, it will enable the firm to better execute its existing strategy.
