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Einhorn's Greenlight Jumps 8% as Factor Reversal Proves Boon

Katia Porzecanski and Simone Foxman

(Bloomberg) -- David Einhorn’s value-oriented Greenlight Capital hedge funds surged in September amid the market’s temporary shift away from long-favored momentum stocks and toward inexpensive equities.

Greenlight gained 8.4% across its funds, bringing returns for the year to a weighted average of 24%, according to an update sent to clients Tuesday.

Einhorn, who has remained committed to his strategy of buying beaten-down stocks while shorting growth companies, is in the midst of a resurgence following his worst year on record. His New York-based firm, which oversaw $12 billion at its peak, lost 34% in its main fund in 2018.

The fund manager has since vowed to rework his portfolio by making fewer, more-concentrated investments, and the rally in the U.S. stock market had helped lift Greenlight’s main fund 15.2% through August. So-called value, or cheaper shares, outperformed growth stocks in the first two weeks of September amid rising bond yields and receding trade worries, reversing a trend that had been in place all year. But the emergence of fresh geopolitical risk put an end to it.

Einhorn’s biggest U.S. equity holdings made money in September, including General Motors Co., Green Brick Partners Inc., AerCap Holdings NV and Brighthouse Financial Inc. Meanwhile, the money manager has also shorted a group of momentum-driven technology stocks including Amazon.com Inc. and Netflix Inc. Those two companies fell during the month.

A spokesman for Greenlight declined to comment.

To contact the reporters on this story: Katia Porzecanski in New York at kporzecansk1@bloomberg.net;Simone Foxman in New York at sfoxman4@bloomberg.net

To contact the editors responsible for this story: Alan Mirabella at amirabella@bloomberg.net, Josh Friedman, Dan Reichl

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