Einhorn Deepens Slide as Greenlight Plunges 19% in First Half

(Bloomberg) -- David Einhorn's main hedge fund at Greenlight Capital fell 7.7 percent in June, bringing losses for the first half of this year to almost 19 percent, according to a client update seen by Bloomberg.

His value-investing strategy fell well short of U.S. stock market returns, as the S&P 500 Index has handed investors about 2.6 percent this year, including reinvested dividends. The HFRX Global Hedge Fund Index, an early indicator of industry performance, declined about 1 percent in the period. Hedge Fund Research Inc.'s Fundamental Value Index, which measures value strategies among equity hedge funds, gained 1.8 percent in the first five months of the year.

Greenlight has posted lackluster returns in recent years as markets, especially for growth stocks, have risen while the hedge fund stuck to its value-investing strategy. Einhorn's losses this year bring the decline for New York-based Greenlight since the end of 2014 to roughly 28 percent, one of the worst showings among his peers. Investors have bolted, pulling almost $3 billion out of the firm in the last two years, Bloomberg reported in May. At $5.5 billion, Einhorn's assets were less than half of where they were at their peak.

The manager has stood by his positions, telling investors in April that the firm's theses “remain intact.” At the time, General Motors Co. -- his biggest public U.S. equity holding -- was trading near a seven-month low. By mid-June, the company had rallied 21 percent on the back of a $2.25 billion investment in its autonomous-car unit from SoftBank Vision Fund. Unfortunately for Einhorn, the stock has since erased most of those gains amid a potential crackdown on auto imports from China and elsewhere. GM has lost 2.1 percent this year, including dividends.

Three out of Einhorn's next four biggest public stock holdings as of March 31 have posted double-digit losses this year. Then there's the so-called bubble basket he's wagering against -- a group of technology stocks that includes Netflix Inc. and Amazon.com Inc. Those two stocks have risen 104 percent and 45 percent, respectively, this year.

A Greenlight spokesman didn't immediately return an email seeking comment on the performance.

--With assistance from Katherine Burton.

To contact the reporter on this story: Katia Porzecanski in New York at kporzecansk1@bloomberg.net

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Josh Friedman, Dan Reichl

©2018 Bloomberg L.P.