“Does this mean that value investing is back? We think the answer is still a resounding no.”
Greenlight Capital is the hedge fund founded by David Einhorn. Despite massive early success, Greenlight has been famous for underperforming the stock market in the 2010’s including a short position on Tesla (which led to Elon Musk sending Einhorn a pair of short shorts).
However, this year has been a little better. They returned 8.4% for the quarter and 13.2% for the half, compared to the S&P 500’s 16.1% decline and 20% decline respectively. This quarterly outperformance was the best in Greenlight’s history. But as the quote at the top of this summary makes clear, that does not mean Einhorn thinks value investing is back.
Instead, Einhorn believes the market is dominated by “those that either will not (index funds), cannot (untrained novice investors) or choose to not (valuation indifferent professional investors) have valuation as a cornerstone of their investment processes.”
In this letter, Einhorn also shares some details on the fund’s top holdings: Atlas Air Worldwide (AAWW), Brighthouse Financial (BHF), CONSOL Energy (CEIX), Green Brick Partners (GRBK) and Teck Resources (TECK). In this moment, Greenlight are looking for companies that (1) look cheap and (2) recognise that in themselves and are buying back stock.
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