Key Takeaways From David Einhorn's Market-Crushing Greenlight Portfolio
Investing.com | Mar 21, 2024 17:37
- American investor David Einhorn manages the Greenlight Capital hedge fund.
- Over the last 5 years, the fund has gained more than 48%.
- In this piece, we will take a closer look at his portfolio composition using InvestingPro.
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David M. Einhorn, an American investor and amateur poker player, founded the hedge fund Greenlight Capital in 1996. Einhorn is known for his outspoken nature in the finance world, often publicly criticizing and advocating for short-selling major companies on Wall Street.
Over the past five years, the fund has delivered an impressive nearly 50% return, primarily investing in consumer durables and mining-related companies. The fund's largest holding, comprising 28.9% of its portfolio, is Green Brick Partners (NYSE:GRBK), making its performance closely tied to the valuation of this stock.
h2 David Einhorn's Influence/h2David Einhorn's influence in the financial world is evident from his inclusion in Time magazine's list of the 100 most influential people in 2013. With an estimated wealth of $1.5 billion in 2019, Einhorn's speeches often highlight weaknesses in specific companies, leading to suggestions for short selling.
His notable calls include accusing Allied Capital of fraud and raising concerns about Lehman Brothers' accounting practices, which later proved to be valid when the investment bank declared bankruptcy. Einhorn also criticized Microsoft Corporation (NASDAQ:MSFT) in 2011, calling for a change in leadership after it lost market value to Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOG). However, his career faced a setback with an $11.2 million fine from the UK Financial Services Authority for insider trading.
h2 Greenlight Capital Fund Overview/h2As of the end of 2023, Greenlight Capital has delivered a 48.2% return over five years and manages assets exceeding $2 billion. The fund's performance and investment ideas are available in the InvestingPro platform's ideas section.
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Source: InvestingPro
The structure of the investment portfolio, which is characterized by an increased share of one or a few companies, makes for less diversification and a lack of risk spreading. In this case, the main two companies on which Greenlight Capital's performance largely depends are CONSOL Energy (NYSE:CEIX) and Green Brick Partners.
Source: InvestingPro
h2 Green Brick Partners Stock Attacks Historic Highs/h2Green Brick Partners is a U.S.-based company engaged in home construction and land development primarily in Texas. The company's stock is trading within a broad uptrend within which the most likely scenario will be an attempt to attack the historical maxima located in the price area of $59.
The upward scenario is further supported by yesterday's Fed meeting, which was perceived as dovish and triggered a dynamic upward momentum in the broad stock market. In the opposite option, a break of the local upward trend line should be the starting point for an extension of the correction to the area of support at $49 per share.
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