Greenlight Capital, the value-driven long-short hedge fund, was up 4 percent in January, compared with just a 2.7 percent gain for the S&P 500 and a 1.6 rise for the Nasdaq Composite. The hedge fund headed by David Einhorn was up 22.1 percent in 2023 and 7.7 percent in 2024.
Greenlight was driven in January by its largest long positions, especially Brighthouse Financial, its third-largest U.S.-listed long at the end of September, the most recent period for which quarterly holdings are publicly available. Shares of the insurance and annuities marketer surged 28.5 percent for the month after the company said it was looking to sell the company, according to several published reports.
Green Brick Partners, the homebuilding and land development company, was up a little more than 7 percent in January. It has long been Greenlight’s largest long, with an outsize position. It accounted for 30 percent of U.S.-listed long assets at the end of the third quarter, per the most recent quarterly 13F filing.
Greenlight experienced mixed success with two Europe-based companies that also ranked among its top-five positions at the end of the fourth quarter. Shares of Lanxess rose by more than 11 percent. Greenlight for the first time listed the German specialty chemicals company as one of its five largest long positions in its fourth-quarter letter. It is not clear whether Greenlight held a position in the stock before then as that information is not required for the 13F filing. On the other hand, Solvay, a Belgian chemicals company, was down more than 4 percent, the only top-five holding to be in the red in January.
CONSOL Energy, Greenlight’s remaining top-five holding at year-end, merged with Arch Resources on January 14 and is now known as Core Natural Resources.
In the last quarter of 2024, Greenlight initiated a sizable position in CNH, a maker of agricultural machinery, according to the fourth-quarter letter. As Institutional Investor previously reported, although the farm equipment industry is in a down cycle, Greenlight thinks the downturn will be milder than the one a decade ago. It paid an average price of $10.53 per share, or less than 11 times expected bottom-of-cycle results, the letter says.
In the fourth quarter, Greenlight also increased its position in Capri Holdings, which detracted somewhat from last year’s performance after the Federal Trade Commission blocked the sale of the fashion giant to Tapestry. In the fourth-quarter letter, Greenlight said while the merger was awaiting approval, Capri reported “simply awful” results.
“Our current thesis is that the interim results were so awful that they likely reflected management distraction, if not neglect,” Greenlight told clients in the letter. “We also believe there is strategic potential for the company’s Versace and Jimmy Choo brands. It should not be difficult for management to re-engage and achieve at least somewhat less awful results. If that happens, the shares should stage a recovery.”