David Einhorn’s Greenlight Capital recently released its third-quarter letter to investors, reporting a 17.7% 2022 return and updating them on portfolio changes.
Many investors think of Einhorn as only a short-seller. While the famed investor has had a few notable short calls in this career, he puts quite a bit of capital to work on the long side too. Given the long-term performance of the market and its trend, that only makes sense.
So far, it’s working out quite well for Einhorn & Co.
His firm generated a 4% return in the third quarter and brought its year-to-date return up to 17.7%. In a year marred by volatility, the long/short approach from Einhorn is working. Compare that to the roughly 22% decline in the S&P 500, and Greenlight’s results are even more impressive.
What Is David Einhorn Buying and Selling?
While we will likely not receive Greenlight’s Form 13F filing until November — as is the norm — we can use Greenlight’s recent investor letter as a partial update.
Coming into the third quarter, Chemours (US:CC) was the seventh largest position for the fund, with a value of $67.4 million. Then the position was reduced significantly in the second quarter (by 67%) and, according to Greenlight’s recent update, closed entirely in the third quarter.
According to the fund: “While the company could release substantial value by separating its commodity-driven titanium dioxide business from its rapidly growing ESG-friendly refrigerant business, we do not believe that management is currently interested in pursuing a separation.”
Further, a deteriorating economic situation was another factor in closing the position — one that Greenlight had held for roughly three years.
Greenlight also closed its positions in Playboy (US:PLBY), International Seaways (US:INSW) and Warner Bros. Discovery (US:WBD). At the end of Q2, the value for those positions stood at $5.2 million, $9.5 million and $22.1 million, respectively.
Interestingly, Greenlight reduced its positions in Playboy and International Seaways by roughly 50% in the second quarter, so fully closing them out is not surprising. However, it is surprising to see the about-face the firm took on Warner Bros. Discovery, a new position in the second quarter.
At the end of Q2, Greenlight had 1.652 million shares in WBD valued at $22.1 million. After completely closing it out in Q3, the firm noted, “We are trying to avoid levered equities in the current economic environment…we lost approximately 40% on WBD in half a year.”
As for Greenlight’s current stance and going into Q4, Einhorn says: “In a correction, ‘buy-the-dip’ gets promptly rewarded. In a bear market, not so much. We haven’t had a bear market since 2008-2009. Our strategy is to remain positioned bearish and to gradually stockpile dry powder, enabling us to make new investments as opportunities present themselves.”
This article originally appeared on Fintel
Sponsored: Tips for Investing
A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.
