The Morning Brief: Two Greenlight Shorts Sink in Price

February 06, 2017   Stephen Taub


Friday was a great day for at least two of David Einhorn’s high-profile short bets. This is no doubt good news for the long-short manager, whose negative bets seemed to cost his Greenlight Capital fund big-time in January.

For example, shares of Athenahealth plunged 14 percent on Friday, to close at $108.90, after the healthcare computing services company reported quarterly earnings that beat estimates but revenues that came up short of expectations. The stock has been a high-profile short of Greenlight for some time now.

Meanwhile, Amazon.com, which is part of Greenlight’s so-called bubble basket of stocks but is also one of the most popular long holdings among hedge funds, fell 3.5 percent on Friday to close at $810.20, even though it issued a very strong earnings report the previous evening. Several investment banks trimmed their price targets on the stock. For example, Credit Suisse reduced its price target from $950 to $900, even though it also raised estimates and maintained its outperform rating on the stock. UBS trimmed its price target from $950 to $930.

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Activist hedge fund firm Marcato Capital Management and Terex Corporation have reached a compromise agreement. Under the deal, Matthew Hepler, a partner at Marcato, has been added to the board of directors of the crane manufacturer and will be included on the slate of nominees at the 2017 annual meeting. The San Francisco hedge fund firm headed by Richard (Mick) McGuire III agreed to typical standstill restrictions. Marcato, which initially disclosed its activist stake in late July, owns 5.2 percent of the shares.

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When Snapchat parent Snap goes public, several hedge funds stand to reap large paper gains. As we have previously reported, a number of Tiger-related funds and others made investments in the photo-messaging application provider over the past few years. They include Paul Hudson’s Glade Brook Capital Partners, which in the past few years has launched several funds that either solely invest in Snap or invest in Snap and a handful of other private companies. Other investors in Snap include Stephen Mandel Jr.’s Lone Pine Capital, Philippe Laffont’s Coatue Management, and James (Jamie) Dinan’s York Capital Management.

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Barclays raised its price target on MPLX from $42 to $44 after it reported fiscal fourth quarter results that were above expectations. As we earlier reported, the master limited partnership (MLP) is one of the largest longs held by Barry Rosenstein’s JANA Partners.

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Leon Cooperman’s Omega Advisors reported it had about $3.5 billion under management as of January 31, up from $3.4 billion at year-end.


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