Portfolio Update on David Einhorn's Greenlight Capital ~ market folly

Monday, January 26, 2009

Portfolio Update on David Einhorn's Greenlight Capital

This update does not come from various SEC filings, but rather from their latest investor letter. In it, we learn that hedge fund Greenlight Capital's top five long equity positions were Allegheny Energy, Arkema, Criteria Caixa, Österreichische Post, and URS Corp. They had an average exposure of 76% long and 37% short. During the last quarter, they sold out of their long position in Ameriprise Financial. Additionally, they covered the following short positions: American Reprographics, Aurelian Resources (Canadian), Equinix, Great Atlantic & Pacific Tea, Itron, Macquarie Airports (Australian), and McGraw-Hill.

And, they also added some new long positions in the last quarter. These additions include: Allegheny Energy (AYE), Commscope (CTV), MEMC Electronic Materials (WFR), gold and an index of gold miners (GDX), and the Japanese Yen. Additionally, they mention that they were buying bank debt, high yield bonds, convertible bonds, gold, select foreign currencies, and equities. Its also interesting to note that Greenlight was short Volkswagen and got caught up in the massive short squeeze, which they detail in the letter. 2008 was the first year they have lost money since opening in 1996.

We've previously covered Greenlight's portfolio holdings, as well as their performance numbers. Also worth checking out is Einhorn's book, where he details his battle shorting Allied Capital. In it, you learn about Greenlight's theses formation and investment process: Fooling Some of the People All of the Time.

You can read their investor letter in its entirety here (.pdf) courtesy of Zero Hedge.

Greenlight is a $6 billion fund ran by David Einhorn and has seen annual returns of over 20%. Greenlight specializes in spin-offs and value investing. Einhorn's name has been popping up in the media a lot over the past year, as he talked about his well documented short position in Lehman Brothers (LEH). And, while that position paid off handsomely for him, it barely offset losses he experienced from other positions.

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