Greenlight Capital: Cautious over Q2

Hedge fund manager Greenlight Capital sold out of a number of positions over the second quarter of 2009. Overall, the firm made purchases of $417mm, while selling $1,148mm, for a net change of $730mm.

Since there seemed to be no broad trends regarding Greenlight Capital’s investments over the quarter, it is clear the firm screened equity investments on a company by company basis. The four new purchases made over the quarter include two insurers, a healthcare company, and a natural gas producer:

• Cardinal Health Inc (CAH) - Change 3,971,173 Shares / $121.32 mm
• Transatlantic Holdings Inc (TRH) - Change 325,000 Shares / $14.08 mm
• ATP Oil & Gas Corp (ATPG) - Change 1,750,500 Shares / $12.18 mm
• Endurance Specialty Holdings Ltd (ENH) - Change 256,359 Shares / $7.51 mm

While the firm only established four new equity positions over the quarter, it closed out of a staggering 21 positions. The largest of the fund's closed positions included:

• streetTRACKS Gold Trust (GLD) - Change -4,209,090 Shares / -$380.00 mm
• Target Corp (TGT) - Change -3,475,444 Shares / -$119.52 mm
• Hess Corporation (HES) - Change -1,300,000 Shares / -$70.46 mm
• Commscope Inc (CTV) - Change -3,717,890 Shares / -$42.24 mm
• MEMC Electronic Materials Inc (WFR) - Change -3,643,849 Shares / $-64.90 mm

The firm’s Top 10 Holdings in order of largest amount held include Pfizer (PFE), URS Corp (URS), Teradata Corp (TDC), Wyeth (WYE), Cardinal Health Inc (CAH), Market Vectors Gold Miners ETF (GDX), Allegheny Energy Inc (AYE), EMC Corp (EMC), Einstein Noah Restaurant Group (BAGL) and Aspen Insurance Holdings Ltd (AHL). These $1.24 billion in value positions accounted for over 60% of Greenlight’s $2.02 billion portfolio.

As far as existing positions are concerned, there were identifiable trends regarding the fund’s allocation. The firm added to its existing positions in healthcare and insurance, whereas it sold off a fair amount of its existing shares in technology. The largest changes of existing positions include:

• Pfizer Inc (PFE) - $1.80mm held (11,987,000 shares); Change 6,057,000 Shares / $90.86 mm
• EMC Corp (EMC) - $9.49mm held (7,244,000 shares); Change -5,576,000 Shares / -$73.05 mm
• Wyeth (WYE) - $1.30mm held (2,860,000 shares); Change 1,430,000 Shares / $64.91 mm
• MEMC Electronic Materials (WFR) - $6.49mm held (3,643,849 shares); Change -3,643,849 Shares / -$64.90 mm
• URS Corp (URS) - $1.58mm held (3,194,924 shares); Change -1,240,000 Shares / -$61.40 mm
• Aspen Insurance Holdings Limited (AHL) - $9.25mm held (4,140,000 shares); Change 1,761,468 Shares / $39.35 mm

The fund's Co-founder David Einhorn, whose claim to fame is the short of Lehman Brothers Inc. prior to its failure, adheres to a strict value-oriented investment philosophy. He founded the firm in 1996 with Co-President Jeffrey A. Keswin. The firm manages a series of value-oriented hedge funds and reinsurer Greenlight Capital Re.

Disclosure: Long WYE, PFE

Comments

[bfras921:]

I suggest all to read Einhorn book fooling investors some of the time

I'm in ATPG and so is einhorn. I hope we are both right. We are both "value investors"

He dumped the gold etf but replaced it with bullion which is cheaper to hold. I believe he has 20% to 25% in gold.

Obviously, he expects higher inflation and lower dollar due to the us govt pizzing away money left and right.

IMHO, the politicians have fuk up the USA whilst blaming everybody but themselves

For you poker afficiando's , einhorn finished 16th in world series of poker

He attracted attention when he shorted allied capital and lehman but he also goes long

Sep 03 09:30 AM

[bfras921:]

> Einhorn is the star of his time in hedge funds business but his success is attributed to luck

i dont agree his success was luck, its hard work

Sep 03 10:56 AM

[bear_mkt:]

Thanks for the article. A really nice summary!

Sep 05 12:20 AM

[DaveinHacke...:]

I shorted BAGL a couple of weeks ago, at $13.78. Click the link if you want to see my rationale for that.

Sep 29 04:11 AM

[DaveinHacke...:]

FYI, I covered that BAGL short Friday at $10.05, for a 27% profit. I found the stock initially using the screener that's on shortscreen.com/

Nov 15 08:14 PM