Greenlight Capital’s shorts may have contributed to the hedge fund’s loss last month.
The hedge fund firm headed by David Einhorn lost 1.7 percent in August, a generally volatile but positive month for the broad market. The loss has cut its gain for the year to 9.1 percent, according to someone who has seen the results.
Last month, the S&P 500 was up 2.3 percent and the Nasdaq Composite gained 0.6 percent. Year-to-date, the two benchmarks are up 18.4 percent and 18 percent, respectively.
It is not clear which investments drove last month’s loss. But it could be the short book. Greenlight’s two largest long positions, which accounted for nearly 40 percent of the U.S. common stock long book at the end of the second quarter, made money in August.
For one, Green Brick Partners, a homebuilding and land development company and Greenlight’s largest U.S.-listed long position, accounting for about 30 percent of the portfolio, gained more than 7 percent. Coal producer CONSOL Energy, the No. 2 long position, was up about 2.5 percent. In its second-quarter letter, Greenlight said CONSOL had been hurt by the Baltimore bridge collapse earlier in the year but that since the harbor reopened, the market has “largely moved past the issue.”
Hewlett Packard, which became the fourth-largest U.S. long position in the second quarter when Greenlight more than doubled its stake, was essentially flat last month. In its letter, the firm noted that after seven quarterly declines, personal computer sales “turned marginally positive” in the second quarter. “The industry appears to be in the early stages of an upcycle, perhaps to be enhanced by recently launched AI-enabled PCs that are expected to ramp up over the next several quarters,” Greenlight noted about HP.
The firm also got a boost from Capri Holdings, which gained 3.5 percent in August. In the second quarter, the hedge fund firm began reestablishing a position in the fashion company known for its Michael Kors brand. Greenlight pointed out in the letter that it had sold its position when the company announced in August 2023 it would be sold to Tapestry for $57 per share. The Federal Trade Commission is suing to block the deal, and the shares now trade in the mid-$30s, which the hedge fund firm deems “a substantial discount to the deal price.”
Greenlight’s macro bet on gold gained more than 4 percent last month. Otherwise, the firm’s largest long positions lost money in August.
No. 3 long Brighthouse Financial dropped 8 percent. In its letter, Greenlight said the marketer of annuities had suffered a loss in a reinsurance arbitration that cost the company several hundred million dollars.
Elsewhere, Kyndryl Holdings, an information technology infrastructure services provider, dropped nearly 12 percent for the month. The stock slipped to the fifth spot among U.S. long positions when Greenlight cut its stake by nearly one-third in the second quarter. Penn National Gaming, now the sixth-largest U.S. long, lost 7 percent in August. It is an operator of entertainment, sports content, and casino gambling. And office supplies retailer ODP, formerly known as Office Depot, plummeted 27 percent after reporting quarterly results that came in well below Wall Street expectations.