Bad day for David Einhorn’s Greenlight Capital.
Shares of Caterpillar surged nearly 8 percent, to close at
$104.42, after the maker of construction and mining equipment,
diesel engines, and industrial gas turbines reported quarterly
earnings that easily exceeded Wall Street expectations. The
stock is now up 12.6 percent for the year.
In its year-end letter, Greenlight told clients it was short
Caterpillar and a few other similar industrial cyclicals that
it said moved up sharply in price after the election. In its
first-quarter letter that made the rounds on Tuesday, the
long-short hedge fund firm said that while it made money on its
longs during the first three months, it lost money on its
shorts. It was an especially rough period for its bubble basket
and Tesla in particular. "Perhaps as the prospects for tax
reform have dimmed, the market has regained enthusiasm for
profitless companies that aren’t at risk of paying
Greenlight states in its letter. "A number of these stocks
are back in full-blown momentum mode." It lamented that
analysts are still hiking their target prices, "which the
market treats as news."
Shares of hedge fund favorite ConAgra Brands fell 3.9
percent, to close at $39.33, after UBS downgraded the shares to
"sell" and cut its price target from $38 to $35, asserting its
premium price-to-earnings multiple "does not reflect
decelerating EPS growth and industry risks."
The investment bank states that the company’s
"decelerating rate of margin improvement and limited room for
positive" consensus earnings revisions will cause the
stock’s relative premium to the market to contract
over the next few quarters. UBS also trimmed 2018 earnings per
At the end of 2016, the stock was the largest U.S. long
JANA Partners. It also owned call options on the stock.
ConAgra was also the sixth largest long of
Ratan Capital Management, the reeling former Tiger Seed
headed by Nehal Chopra.
Tide Point Capital Management disclosed that as of March 30
it owned 2 million shares of Kayne Anderson Acquisition Corp.,
or 5.7 percent of the company created to do deals in the energy
Several hedge fund firms were among the investors who
recently participated in a private placement of stock and
warrants of SteadyMed Therapeutics, a specialty pharmaceutical
company that focuses on developing drugs to treat orphan and
high-value diseases. The hedge funds are
Adage Capital Management, Deerfield Management, and Kingdon
Capital Management. The other investor was OrbiMed, a private
equity firm which specializes in health care companies.