Greenlight Capital, the hedge fund firm run by David Einhorn, got off to a good start this year, says the company's Q1 letter to investors.
In Q1, the fund almost reversed Q4's losses. Greenlight funds returned 11.0% for the quarter, while the S&P 500 returned 13.6%.
Among the fund's biggest gainers--AerCap Holdings (AER +1.5%), Brighthouse Financial (BHF +0.7%), Deutsche Pfandbriefbank (OTC:PBBGF), General Motors (GM +1.1%), and Green Brick Partners (GRBK -1.3%).
Einhorn takes a deeper dive into his thesis for Brighthouse, which he says has been misunderstood because GAAP accounting requires that hedges get marked to market each quarter while liabilities are not.
BHF's Q4 results and earnings call "should dispel this misunderstanding," he writes. Still, he sees Brighthouse as undervalued and observes improved chances for the company to meet its target to buy back $1.5B of stock by the end of 2021.
Sees BHF adjusted EPS of $9 in 2019 vs. $7.44 in 2018 (consensus estimate $8.82).
Initiated no new long positions during Q1; completed exit from Bayer (OTCPK:BAYZF), which resulted in a small gain over its two-and-a-half year holding period.
Previously: Einhorn tackles Tesla, skims over GM (April 12)
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