David Einhorn to Investors: Long General Motors and Short Caterpillar
Hedge fund and different market’s performance
Various hedge funds are providing decent returns in 2016 after slow returns in 2015. March 2016 was fruitful for many funds. The S&P 500 Index (SPY) (SPXL) (IWF) provided a 6.3% return in March 2016. According to data provided by Preqin private equity, hedge funds provided a return of 3.8% in the same month.
The emerging market (VWO) (EDC) provided the biggest gain in March 2016. The iShares MSCI Emerging Markets (EEM) tracks the performance of emerging markets. It provided a return of 11% in March. The iShares MSCI ACWI (ACWI) tracks the performance across the globe. It returned 6% in March. Read Why the Sentiment toward Emerging Markets Has Been Changing to learn more about the emerging market’s performance.
Where’s Greenlight Capital’s performance?
Greenlight Capital provided a return of 2.5% in 1Q16. In the first quarter, the fund made many short, long, and macro positions. The short position in US oil drillers and long positions in Time Warner, Apple (AAPL), and CONSOL Energy (CNX) provided positive returns in 1Q16. The above graph shows the fund’s top five holdings as of 4Q15.
However, Apple’s recent performance showed a slowdown. The company’s sales growth for the quarter ending March 2016 fell 13% to $50.6 billion. It’s the first decline in revenue since 2003 due to fears about China. Carl Icahn is a big fan of Apple. He said that he offloaded 7 million shares and reduced his holdings to 16.4% from 20.9%. Read Is the Sky Falling? Carl Icahn Exited His Investment in Apple to learn more about Carl Icahn’s stance on Apple. What’s David Einhorn’s stance on Apple? We’ll discuss this later in the series. Some of the fund’s strategies didn’t work. This was heavy on the fund’s overall performance. On the macro front, the negative interest rate declared by the Bank of Japan and the European Central Bank became heavy on the fund’s financial portfolio.
In the next part, we’ll analyze why David Einhorn is bullish on gold.
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