Tracking David Einhorn's Portfolio - Q1 2019 Update

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Includes: ADNT, AER, AGO, ATUS, BHF, CC, CCR, CEIX, CNX, DDS, ESV, GLRE, GM, GRBK, HGV, MDCO, MET, NFLX, SATS, SDRL, SFLY, TGP, TPX, TSLA, VOYA, XELA
by: John Vincent
Summary

David Einhorn's 13F stock portfolio value increased from $1.38B to $1.41B this quarter.

Greenlight decreased General Motors, Ensco plc, Tempur Sealy International, and Voya Financial while increasing CNX Resources and CONSOL Energy.

The largest three positions are at ~53% of the portfolio. As of Q1 2019, the overall portfolio is 112% long and 70% short.

This article is part of a series that provides an ongoing analysis of the changes made to David Einhorn’s Greenlight Capital 13F portfolio on a quarterly basis. It is based on Einhorn’s regulatory 13F Form filed on 05/15/2019. Please visit our Tracking David Einhorn's Greenlight Capital Holdings article series for an idea on his investment philosophy and our previous update for the fund’s moves during Q4 2018.

Greenlight Capital’s 13F portfolio value stood at $1.41B this quarter. It is up ~2% compared to $1.38B as of last quarter. Einhorn’s Q1 2019 letter reported that the fund returned 11% for the quarter. This is compared to negative 13.6% for the S&P 500 Index. In addition to partner stakes, the fund also invests the float of Greenlight Capital Re (GLRE). Despite the availability of relatively permanent capital from that source, AUM went down from ~$7B to ~$2.5B during 2018 due to huge redemptions. Partly in response, Greenlight reopened the fund to new investors. To learn about David Einhorn and the perils of shorting, check out his “Fooling Some of the People All of the Time, A Long Short (and Now Complete) Story”.

Note: Greenlight maintains a hefty short book. Short stakes currently held include Tesla (TSLA), Netflix (NFLX), and Assured Guaranty (AGO).

New Stakes:

Teekay LNG Partners (TGP): TGP is a very small 0.53% of the portfolio stake established this quarter at prices between $11 and $15.25 and the stock currently trades at $14.43.

Stake Disposals:

Dillard’s Inc. (DDS), Chemours (CC), and Shutterfly Inc. (SFLY): These three small positions (less than ~1.5% of the portfolio each) purchased last quarter were disposed this quarter. These stakes had seen previous roundtrips as well. Dillard’s was a medium sized position exited in Q2 2018 at a modest profit after three years of ownership. Chemours had a very successful roundtrip (~4x returns) during the two-year period that ended in Q1 2018. Shutterfly was a very small position disposed in H1 2018. The quick roundtrips might indicate liquidity pressure due to redemptions.

Stake Increases:

CNX Resources (CNX) previously CONSOL Energy: CNX is a 4.43% stake purchased in Q3 2014 and built up over the next several quarters. The three quarters through Q4 2016 had seen a ~50% combined reduction at prices between $8 and $19. The pattern reversed in Q1 2017: ~50% increase at prices between $12 and $16.50. The stock currently trades at $8.47. Last four quarters had seen an ~80% selling at prices between $11 and $18 while this quarter saw the pattern reverse: two-thirds increase at prices between $9.75 and $13.50.

Note: The prices quoted above are adjusted for the spinoff of CONSOL Energy in November 2017.

CONSOL Energy (CEIX): CEIX is a small 0.83% of the portfolio stake purchased last quarter at prices between $29.50 and $41.50 and increased by ~140% this quarter at prices between $31.50 and $38.50. The stock currently trades below those ranges at $28.97.

Stake Decreases:

General Motors (GM): GM is Greenlight’s largest position at ~24% of the portfolio. The position was established during the first three quarters of 2015 at prices between $28.50 and $39. The three quarters through Q2 2016 had also seen a combined ~22% increase at prices between $27 and $34. The stake was increased by around four-times during Q4 2016 and Q1 2017 at prices between $31 and $38.50. The next three quarters saw a ~65% reduction at prices between $32.50 and $46.50. Last year saw another ~55% selling at prices between $30.50 and $45 and that was followed with a ~24% reduction this quarter at prices between $32 and $40. GM currently goes for $37.

Note 1: In March 2017, Greenlight proposed GM shares be split into two classes (one with dividend and the other without) but management rejected the plan. In response, Greenlight nominated three members to the board but GM shareholders rejected the proposal and the nominations in June.

Note 2: Greenlight had a previous successful roundtrip with GM: A ~10% stake was disposed in Q1 2014 at an average exit price of $35.76 compared to an average entry price of $23.87.

Ensco Rowan plc (ESV): ESV is a fairly large 4.22% portfolio position. It was established in Q4 2017 at a cost-basis of $22.88. There was a stake doubling in Q1 2018 at prices between $17.36 and $29.72 and the stock is now at $10.86. This quarter saw a ~25% selling at prices between $14 and $19.

Note: The prices quoted are adjusted for the 1-for-4 reverse stock split following the merger with Rowan that closed in April.

Tempur Sealy International (TPX): A very small 0.34% of the portfolio stake in TPX was purchased in Q2 2017. The following quarter saw a whopping 600% increase to a fairly large position at a cost-basis of $56.11. Q4 2017 saw a ~30% selling at prices between $51 and $68 and that was followed with a ~70% reduction next quarter at prices between $44 and $64.50. Last quarter saw the pattern reverse: ~70% increase at prices between $39 and $54. The stock is now at $62.14. This quarter saw a ~50% selling at prices between $41 and $60. The stake is now at 2.70% of the portfolio.

Voya Financial (VOYA) previously ING US: The 2.61% VOYA position was established in Q2 2013 at a cost-basis of $20.29. 2017 saw a ~60% combined increase at prices between $24 and $41. Last year had seen an ~80% selling at prices between $37 and $55 and that was followed with another ~30% reduction this quarter at prices between $39.50 and $51.50. The stock currently trades at $53.03. Greenlight is harvesting gains.

Exela Technologies (XELA): In July 2017, Quinpario Acquisition (a SPAC that had an IPO in January 2015) merged with HOV LLC and Novitex Holdings (financial technology services provider) to form Exela Technologies. Greenlight has a 5.5% ownership stake in Exela. The stock started trading at ~$10 and currently goes for $3. The 1.90% portfolio stake saw a ~4% trimming this quarter.

Kept Steady:

Green Brick Partners (GRBK): The large (top three) ~15% of the 13F portfolio GRBK stake was acquired as a result of BioFuel Energy’s JGBL Builder Finance acquisition and rename transaction. The deal closed (October 2014) with Greenlight owning 49% of the business. David Einhorn was appointed Chairman of the Board following the transaction.

AerCap Holdings N.V. (AER): AER is a large (top three) ~14% position. It was established in Q2 2014 at prices between $39 and $48. Q4 2014 through Q3 2015 saw a combined ~270% increase at prices between $36.50 and $48.50. First three quarters of 2016 had also seen another ~70% increase at prices between $25.50 and $42. The four quarters through Q3 2018 saw the stake reduced by ~70% at prices between $49 and $57.50. The stock currently trades at $49.80.

Brighthouse Financial (BHF): BHF is a large (top five) stake at 8.49% of the portfolio. The position was established in Q3 2017 and increased by ~60% in the following quarter at an overall cost-basis of $57.92. The stock is currently well below that at $37.41. There was a ~70% selling last quarter at prices between $29 and $46.50.

Note: BHF is a spinoff of MetLife’s (MET) U.S. Retail business (annuities and life insurance) that started trading in July 2017.

CONSOL Coal Resources LP (CCR): CCR is a top five 6.89% portfolio stake. Greenlight controls ~35% of CCR. The stake came about as a result of CONSOL’s coal spinoff in 2015. The stock started trading at ~$15 and currently goes for $16.76.

Altice USA (ATUS): ATUS is a ~6% portfolio stake established in Q3 2018 at a cost-basis of $18.38 and increased by ~40% last quarter at prices between $14.50 and $19. The stock is currently at $24.60.

Hilton Grand Vacations (HGV) and EchoStar (SATS): HGV is a 2.45% of the portfolio stake established last quarter at prices between $24.50 and $33 and the stock currently trades at $27.33. The 1.55% SATS position was purchased last quarter at prices between $34 and $46 and it is now at $40.40.

Adient plc (ADNT): ADNT is a 1.82% portfolio stake that saw a ~300% increase in Q3 2017 at prices between $64 and $86. There was a roughly one-third selling in Q1 2018 at prices between $57.50 and $84. Next quarter saw another ~50% reduction at prices between $47.50 and $66. There was an about turn in Q3 2018: position almost doubled at prices between $38 and $51 and that was followed with a ~75% increase last quarter at prices between $15 and $38. The stock is now near the low end of those ranges at $17.97.

Medicines Company (MDCO) and Seadrill Ltd. (SDRL): These two very small (less than ~2% of the portfolio each) stakes were kept steady this quarter.

The spreadsheet below highlights changes to Greenlight’s 13F stock holdings in Q1 2019:

David Einhorn - Greenlight Capital - Q1 2019 13F Report Q/Q Comparison

Disclosure: I am/we are long BHF, CNX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.