We might have expected David Einhorn’s Greenlight Capital to have suffered terribly during the recent equity rally.
But no! Mr Einhorn might scold the Obama administration for pursuing “short-term popularity over our solvency” and advise everyone to buy gold, but funds under his management seem to be holding up relatively well.
According to Greenlight’s Q3 report to “partners”, the firm’s three main funds returned 7 per cent, 5.4 per cent and 4.8 per cent, net of fees and expenses, respectively, in the three months to end-September. That brings respective year-to-date net returns to 30.0 per cent, 26.2 per cent and 22.9 per cent.
And the 41 year-old Einhorn, it has to be said, gives good prose.
Exhibit A:
The bull case is that with all the recessionary cost-cutting in corporate America, a recovery in sales will create record earnings in short order. The mega-bull case, which can’t be ruled out, cynically believes that the authorities will foster yet another asset bubble so that some folks feel wealthier and spend some of the paper wealth on holiday gifts and other items thereby improving the economy and justifying the rally. The bear case challenges the likelihood of sales recovering and questions the repeatability of some of the positive factors that were in place during the prior peak. Both sides seem to make sense and we find ourselves agreeing with proponents of each, depending on the day.
Exhibit B:
We got a new PB — Prime Baby, that is. Vinit and Anshu Sethi welcomed baby Nikhil in September. Vinit’s note to the team stated, “Mom and baby are doing well. Dad is good. Brother Aarav is amazed by the diaper consumption.” Enough said. We also got a new PB — Prime Broker. We engaged JP Morgan as an additional prime broker to clear and custody some of our securities.
Give it 38 years or so and he’ll be sounding like Warren Buffett.
Lots more in the usual place.
Related links:
From the desk of David Einhorn (When rights issues aren’t so good) – FT Alphaville
A good summer for David Einhorn – FT Alphaville