Who’s afraid of the stock market? Not David
Einhorn, the widely watched and frequently imitated hedge fund
manager, who has dialed up his exposure to the equity markets
over the past few months.
The position hasn’t hurt Einhorn’s
flagship long-short equity fund at Greenlight Capital, which
was essentially flat in November, losing a mere 0.5 percent for
the month; it is still up 10 percent for the year.
While many managers have taken down their exposure to the
markets, Einhorn is getting more bullish. As of the end of
November, Greenlight’s investment portfolio was
roughly 118 percent long and 72 percent short, compared with
being 100 percent long and 73 percent short at the end of
October and 96 percent long and 70 percent short at the end of
September. This exposure analysis does not include gold, credit
default swaps, sovereign debt, cash, foreign currency
positions, interest rate derivatives and other macro positions.
While Greenlight’s performance is worse than the
S&P 500 — which is up 12.6 percent for the
year — and the tech-driven Nasdaq Composite,
which has surged 15.5 percent in the first 11 months, it is
still doing better than most of its peers. The average hedge
fund gained 4.3 percent through October, according to industry
tracker Hedge Fund Research.
At the end of November, Greenlight’s largest
disclosed long positions were tech giant Apple, chemical
company Arkema, health insurance provider Cigna, car maker
General Motors and gold. Arkema, which was one of its largest
positions earlier in the year, replaced Seagate Technology in
this line-up, which had not changed during the previous two
Over the past few years, the 44 year-old Einhorn has emerged as
one of the most emulated hedge fund managers of his generation,
particularly after his early but ultimately prescient short
position against Lehman Brothers, which went under in 2008.
When Einhorn speaks at conferences or on TV, investors listen
closely and act impulsively on what he says.
He has received much attention for two bearish bets detailed at
the Value Investing Congress, an investing summit that
typically takes place in New York in October. Since he laid out
his reasons for shorting Green Mountain Coffee Roasters at the
2011 conference, the stock has sunk more than 55 percent. Since
he made a bearish case against Chipotle Mexican Grill at this
year’s presentation, shares of the Mexican
take-out chain have fallen 12 percent.
Meanwhile, two stocks Einhorn touted as long positions at the
conference this year have been profitable. GM is up 6 percent
while Cigna is up 7 percent.
The early data come from an investment account of Greenlight
Capital Re Ltd. — a Cayman Islands-based insurance
company controlled by Einhorn — that is managed by a
Greenlight Capital entity.