Greenlight Capital Q1 Letter: David Einhorn Cuts Net Exposure In Half

David Einhorn is out with Greenlight Capital's first quarter letter to investors.  Greenlight finished Q1 -1.7% net of fees.  While many investors will care more about Einhorn's equity picks, we think the more noteworthy takeaway is the fact that the hedge fund has cut net exposure in half from 30% down to 14% net long.

Greenlight writes, "Bottom up: short candidates are easy to find ... the opportunity set on the long side is quite constrained.  Top-down: Valuations are on the high side and earnings are in a precarious spot."

Einhorn then touches on the Federal Reserve, noting that, "How fast it tightens should be less important than the fact that it will tighten."

As far as individual equity moves go, Greenlight made the following adjustments: started new positions in AerCap (AER), Chicago Bridge & Iron (CBI), as well as re-entering General Motors (GM) shares.  They sold Aetna (AET), closed shorts in Safeway (SWY), Freescale Semiconductor (FSL), and Lorillard (LO).  However, they started a new short in Reynolds American (which acquired LO.)

Embedded below is Greenlight Capital's Q1 2015 letter with the thesis on their new investments:

Corsair Capital's Thesis on Acacia Research (ACTG): Q4 Letter

Jay Petschek and Steve Major's hedge fund Corsair Capital is out with its Q4 2012 letter to investors.  In it, they provide an investment thesis write-up on one of their core picks: Acacia Research (ACTG).

Updates on Portfolio Holdings

They also provide brief updates on some of their other positions such as DigitalGlobe (DGI), which received approval for its acquisition of GeoEye.  They feel the combined entity will "yield significant revenue, expense, and capital synergies and should outperform for many years, as demand for its mapping products and services grows."  You can view Corsair's analysis of DigitalGlobe which was penned before the GEOY takeover.

Additionally, Corsair continues to like Chicago Bridge & Iron (CBI).  The hedge fund originally invested in Shaw Group, which CBI bought out.  They see CBI earning around $5.50 per share in cash earnings by 2014.

Acacia Research Thesis

This company essentially helps monetize underutilized patents and Corsair feels they fill a big gap as the majority of patents are held by small businesses or individual inventors who lack the wherewithal to protect/enforce these patents.  Corsair bought in November and think shares could trade over $40 per share, deserving a 15x multiple.

Embedded below is part of Corsair Capital's Q4 letter with their investment thesis on Acacia Research Corp:




For more hedge fund letters, we also posted up excerpts from Children's Investment Fund Q4 letter.