The Morning Brief: Einhorn’s Greenlight Suffers Redemptions

July 14, 2017   Stephen Taub

Investors pulled some $400 million from the firm, according to a report.

David Einhorn is the latest victim of the what-have-you-done-for-me-lately mentality among hedge fund investors these days. Clients redeemed about $400 million from Einhorn’s Greenlight Capital at the end of June, according to the Wall Street Journal. The firm’s flagship long-short fund lost 2 percent in the first half of the year, while the Standard & Poor’s 500 stock index surged 9.3 percent. The sometime-activist fund is also well below its high-water mark after losing 20.2 percent in 2015. Last year it made back less than half the loss, gaining 8.4 percent.

Investors who most recently got into Greenlight’s funds are especially unhappy. If you recall, Greenlight reopened to existing investors on Nov. 1, 2014 and new clients on Dec. 1, 2014. Greenlight this year has been especially hurt by shorting several of the stocks it disclosed holding in what it calls its "bubble basket." For example, shares of Amazon.com gained about 31 percent in the first half of the year, Tesla surged more than 50 percent, and streaming video giant Netflix returned nearly 30 percent for the year. The WSJ also speculates that investors are concerned that Einhorn is currently going through a divorce.

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Shares of JANA Partners favorite Tiffany jumped 1.7 percent, to close at $94.04, after the high-end jewelry retailer tapped Alessandro Bogliolo as chief executive officer. He was formerly an executive at Italian luxury retailer Bulgari for 16 years. At the end of the first quarter, Tiffany was the largest long position of Barry Rosenstein’s JANA, which was the company’s fourth-largest shareholder. The stock is up more than 21 percent this year.

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Shares of Snap rebounded sharply, gaining about 3 percent to close at $15.69, after Stifel Nicolaus upgraded the shares from hold to buy, asserting that some worries about the company are overblown, according to CNBC.

"Competition from Instagram remains a chief concern for investors, though recent app download trends appear healthy in key ad markets, leading us to believe near-term risks to revenue-generating [daily active users] may be overstated," the analyst report stated, according to CNBC’s account. "Despite concerns in the market and persistent comparisons to Twitter, we believe Snap’s business remains on track fundamentally as it continues to develop innovative consumer products and increasingly sophisticated tools for advertisers."


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