David Einhorn Says Greenlight Is Positioned for Rising Inflation

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David Einhorn said inflation “is only going one way -- higher.”

“The wind is now at our backs. The economy is in full recovery mode,” the Greenlight Capital founder wrote in his first-quarter letter to investors, seen by Bloomberg. “Right now, we remain positioned for rising inflation and inflation expectations.”

David Einhorn Says Greenlight Is Positioned for Rising Inflation

The comments come after Greenlight capital fell 0.1% in the first quarter, trailing the S&P 500’s gain of 6.2%, including reinvested dividends.

Greenlight’s largest holding, Green Brick Partners Inc., weighed on the fund’s performance and had become an excessively large position after the stock doubled last year, Einhorn said. In January, Greenlight sold about a quarter of its shares at a discount, hurting results that month.

The fund’s short book also underperformed in 2020 and early this year, which Einhorn called “unacceptable.” The market’s focus in January on highly shorted companies hurt several of Greenlight’s bearish positions, which experienced “sudden, sharp rises,” he wrote.

“A change is certainly needed,” Einhorn said. “If we swing a little less hard, we should hit more balls.”

A spokesman for the firm declined to comment.

Other highlights from the letter:

  • Vinit Sethi will assume leadership of Greenlight Masters, the firm’s fund of hedge funds
  • Mitch Golden, Greenlight Masters portfolio manager, will leave at the end of this month.

©2021 Bloomberg L.P.

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