David Einhorn's Greenlight Capital 13F Filing: Q4 2008 ~ market folly

Monday, March 2, 2009

David Einhorn's Greenlight Capital 13F Filing: Q4 2008

This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

Next up is Greenlight Capital, a $6 billion fund ran by David Einhorn that specializes in spin-offs and value investing and has seen annual returns of over 20%. 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. He was caught in the massive Volkswagen short squeeze as he detailed in one of his latest investor letters. Einhorn has also recently detailed the saga between his fund and Allied Capital, a company he shorted, in his book Fooling Some of the People All of the Time: A Long Short Story. It gives you an inside perspective as to how Greenlight constructs and researches their investment theses and we highly recommend it. Greenlight approaches things by identifying mispricings in the markets and going from there.

He has recently advocated getting long gold (GLD), gold miners (GDX), and the Japanese Yen. And, at the same time, he has advocated shorting commercial real estate property REITs, saying that a drop in rents of 10% hurts values due to leverage and also points to the difficulty they will have trying to refinance debt coming due. We covered more of his recent thoughts and ideas in our Greenlight portfolio update. In terms of recent performance, his offshore fund finished 2008 -16.5% as detailed in our 2008 year end hedge fund performance numbers list.

The following were their long equity, note, and options holdings as of December 31st, 2008 as filed with the SEC. We have not detailed the changes to every single position in this update, but we have covered all the major moves. All holdings are common stock unless otherwise denoted.

Some New Positions (Brand new positions that they initiated in the last quarter):
SPDR Gold Trust (GLD)
Allegheny Energy (AYE)
Commscope (CTV)
Market Vectors Gold Miners ETF (GDX)
MEMC Electronic Materials (WFR)
CF Industries (CF)
Dow Chemical (DOW)
Aspen Insurance (AHL)
Proshares Ultrashort Treasuries (TBT)
JA Solar (JASO)
Focus Media (FMCN)
Cadence Design (CDNS)
Patterson-Uti Energy (PTEN)
Carpenter Technology (CRS)
Healthnet (HNT)
Foster Wheeler (FWLT)
McDermott (MDR)
Lawson Software (LWSN) Bond
Patriot Coal (PCX)
Western Digital (WDC)
Cadence Design (CDNS) Bond
Ensco International (ESV)
Colonial Properties (CLP)
Smithfield Foods (SFD)
Huntsman (HUN)
Aercap Holdings (AER)
Corning (GLW)
Duke Realty (DRE)

Some Increased Positions (A few positions they already owned but added shares to)
EMC (EMC): Increased position by 437%
Ticketmaster Entertainment (TKTM): Increased position by 283%
Guaranty Financial (GFG): Increased position by 234%
URS Corp (URS): Increased position by 86%
Teradata (TDC): Increased position by 66%
Echostar (SATS): Increased position by 49%

Some Reduced Positions (Some positions they sold some shares of - note not all sales listed)
Dr Pepper Snapple (DPS): Reduced position by 91%
MDC Holdings (MDC): Reduced position by 91%
Dana Holding (DAN): Reduced position by 72%
Triple-S Management (GTS): Reduced position by 50%
Helix Energy Solutions (HLX): Reduced position by 37%
Health Management Associates (HMA): Reduced position by 35%
Energy Partners (EPL): Reduced position by 34%

Removed Positions (Positions they sold out of completely)
Ameriprise Financial (AMP)
Kinross Gold (KGC)
Pomeroy IT Solutions (PMRY)
Mercer (MERC)

Top 20 Holdings (by % of portfolio)

  1. SPDR Gold Trust (GLD): 15.9% of portfolio
  2. URS Corp (URS): 9.4% of portfolio
  3. Allegheny Energy (AYE): 7.5% of portfolio
  4. Target (TGT): 5.97% of portfolio
  5. Commscope (CTV): 5.4% of portfolio
  6. Market Vectors Gold Miners ETF (GDX): 5.4% of portfolio
  7. MEMC Eletronic Materials (WFR): 5.2% of portfolio
  8. EMC (EMC): 5.2% of portfolio
  9. Teradata (TDC): 4.8% of portfolio
  10. CF Industries (CF): 4.4% of portfolio
  11. Einstein Noah Restaurant Group (BAGL): 3.1% of portfolio
  12. Dow Chemical (DOW): 2.33% of portfolio
  13. Echostar (SATS): 2.3% of portfolio
  14. Helix Energy (HLX): 2.1% of portfolio
  15. MI Developments (MIM): 2% of portfolio
  16. Employers Holdings (EIG): 1.9% of portfolio
  17. Health Management (HMA): 1.3% of portfolio
  18. Aspen Insurance (AHL): 1.1% of portfolio
  19. Guaranty Financial (GFG): 1.1% of portfolio
  20. Republic Airways (RJET): 0.9% of portfolio

Considering how Einhorn brought Gold (GLD) up to his largest holding over the course of last quarter, he must be sitting pretty with the recent surge in gold, which is up over 18% or so since December. Assets from the collective long US equity, options, and note holdings above were $2 billion this quarter. This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered Paulson & Co (John Paulson), Carl Icahn, Warren Buffett, Stephen Mandel's Lone Pine Capital, George Soros, Bill Ackman's Pershing Square, Andreas Halvorsen's Viking Global, and Timothy Barakett's Atticus Capital. Look for our updates as we will be covering a new fund each day.

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