Greenlight Hedge Fund Falls 1.1% in April, Extending Decline

(Bloomberg) -- David Einhorn’s main hedge fund at Greenlight Capital fell 1.1 percent in April, extending its loss this year to 14.9 percent, according to a client update seen by Bloomberg.

The performance for his value-investing hedge fund strategy compares with a 0.4 percent return for the S&P 500 Index, including reinvested dividends. The HFRX Global Hedge Fund Index, an early indicator of industry performance, was up 0.3 percent in the month as of April 26, paring declines to for this year to 0.8 percent.

Einhorn, 49, told investors in early April that the market has been going against his largest wagers, resulting in a roughly 14 percent loss in his flagship fund in the first quarter. His long positions have been losing money despite positive earnings from the companies, and the shares he has bet against have climbed while the firms have missed earnings estimates. His 20 biggest long positions fell 5.6 percent, and his 20 largest shorts fell 5.5 percent.

The hedge fund manager, who made his fame as a short seller betting against lender Allied Capital Corp. and then Lehman Brothers Holdings Inc. before its collapse, reiterated his disappointment Tuesday morning on an conference call. He said Greenlight’s gains from a holding in Micron Technology Inc. and a short on Tesla Inc. did little to offset broader losses, which were led by an investment in General Motors Co. and a wager against Netflix Inc. GM shares fell 11.3 percent in the first quarter, while Netflix surged 54 percent.

“The quarterly result was one of our worst,” Einhorn said on Tuesday’s call on which results for Greenlight Capital Re Ltd., the Cayman Islands-based reinsurer where he is chairman, were discussed. “Despite a good earnings season for our portfolio, in which most of our largest positions recorded fundamentals that were consistent with our investment thesis, we managed to lose a bit of money on most positions with no material winners to offset the losses.”

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The reinsurer reported on Monday a loss per share for the first quarter of $3.85. The company had a net investment loss of $145.2 million in the first three months of the year on the back of the portfolio’s poor performance.

Regarding Netflix, he said while the company managed to pull in more subscribers than expected after spending on marketing, technology and development, free cash flow is deteriorating.

“In our view, Netflix has shown an ability to turn cash into subscribers, but not the ability to turn subscribers into cash,” he said.

Jonathan Gasthalter, an external spokesman for New York-based Greenlight, declined to comment.

©2018 Bloomberg L.P.

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