David Einhorn’s Hedge Funds Gain 0.5% in August With Markets Rallying
David Einhorn’s Hedge Funds Gain 0.5% in August With Markets Rallying
(Bloomberg) -- David Einhorn’s Greenlight Capital hedge funds rose slightly in August even as U.S. stocks extended their rally.
The funds climbed 0.5%, the third positive month for Greenlight in 2020. But the gains weren’t enough to erase losses for the year, with the funds still down 17%, according to a person with knowledge of the matter who asked not to be named because the information is private. The HFRX Global Hedge Fund Index, an early indicator of industry performance, rose about 1.4% last month, bringing year-to-date returns to 1.7%.
The S&P 500 advanced 7% in the month, marking the equity benchmark’s best August since 1986. U.S. stocks have climbed for five straight months, the longest winning streak since September 2018. Fiscal and monetary policies introduced to fight the Covid-19 pandemic have helped drive the gains.
Even though most of Greenlight’s largest disclosed long positions at the end of the second quarter rose in August, the VanEck Vectors Gold Miners ETF slipped 1.6%. Tesla Inc., a stock Greenlight has bet against, surged 74% during the month.
Einhorn’s value investing strategy has fallen out of step with markets in recent years. He’s been unable to recoup losses that started when the funds fell 20% in 2015, then deepened three years later with a 34% slump, Greenlight’s biggest annual decline. Last year, he vowed to rework his portfolio by making fewer, more concentrated investments.
In a second-quarter investor letter, Einhorn said he bought a new stake in Atlas Air Worldwide Holdings Inc., betting that the cargo carrier will benefit from a shortage of airfreight capacity caused by the coronavirus crisis. Atlas Air rose more than 8% in August. The hedge fund is also wagering on ways to profit from rising inflation by establishing “a new, large macro position” in 2-, 5- and 10-year inflation swaps, according to the letter.
The firm managed $2.6 billion as of Jan. 1, down from $12 billion at its peak.
A spokesman for the New York-based firm declined to comment.
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