November 17, 2015 / 8:45 PM / in 2 years

Einhorn's Greenlight takes new long positions, exits some shorts: letter

BOSTON (Reuters) - Billionaire investor David Einhorn, whose Greenlight Capital hedge fund is nursing a 17 percent loss this year, told investors on Wednesday that he made new bets on fashion company Michael Kors and electric services company UIL Holding.

Einhorn also exited a prominent short bet against real estate company St. Joe as well as bets against U.S. Steel, Robert Half and Intel. The firm also liquidated stakes in LAM Research and Citizens Financial Group.

In his eight-page long letter, Einhorn also reminded investors that he often invests in misunderstood companies and runs a concentrated portfolio, which means that market downdrafts can hurt performance.

“Although large losses don’t occur often, in a punitive environment we can have more than one in a short period of time,” the manager told his investors in a letter sent on Wednesday and seen by Reuters.

The decline -- one of the biggest in the hedge fund industry this year -- puts Einhorn on course to post his first loss since the financial crisis in 2008. The loss also comes less than one year after he invited investors to put fresh money into his fund, something that happens very rarely.

“Just as summer began, we ran into significant problems in rapid succession in three of our largest positions,” the manager said, noting that issues remain at two of those positions and that Greenlight’s troubles far preceded fears about slower growth in China which roiled financial markets in August.

Einhorn acknowledges making a mistake by not hedging the commodity risk entailed by his bet on coal and natural gas production company CONSOL Energy but said there is “plenty of overlooked good news.”

Between June 4 and August 18, Greenlight lost more than 14 percent, the letter said, noting that “our shorts fell almost as much as our longs and we lost only a little more than our next exposure during the correction.”

Einhorn also showed some disappointment that his prominent short bet against Pioneer Natural Resources Co, which he called the “mother fracker,” hasn’t made more money, especially with long-term oil prices below $60.

He also said that he re-entered a short position on Keurig Green Mountain Inc at $102.08, noting “the second time has been a charm.”

At the end of the quarter, Einhorn’s biggest positions were in Apple Inc, CONSOL Energy Inc, General Motors Co, gold and Japan’s Resona Holdings Inc.

Reporting by Svea Herbst-Bayliss and Jennifer Ablan; Editing by Christian Plumb

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