David Einhorn’s Greenlight Capital has seen better years. It has typically returned around 19% and has routinely beat the S&P 500. However, the last couple have years have seen the index outperforming Greenlight Capital. Last year, the S&P 500 rose 13% more than Greenlight’s holdings, and in 2012, it was 8%. The fund rose 5.6% in November, but is still lagging for the year.
However, Forbes notes that just as a stock isn’t a buy when it is flying high, so a hedge fund is not necessarily worth getting into when it is at its height. Given Greenlight’s track record, it might be worth at least piggy backing on its holdings if not getting into the fund. While clients have the advantage of holding stocks as the manager makes his trades, there are high fees involved. While the general public doesn’t know what moves the manager makes until he or she files a report, some investors feel following the trades of great managers is a profitable strategy.
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So what moves has Einhorn been making lately? First he has shorted momentum names in tech, and lately these stocks have been hit, so it is a strategy that has been working.
Forbes identified four stocks Einhorn has been buying
1) Einhorn increased his stake in Civeo to 9.9%. The stock is down 60% and Einhorn is an activist investor, recommending the ouster of the CEO and the return of capital to shareholders.
2) Greenlight holds a 9.8% in Conns, the retailer and lender. The stock has declined 58% for the year, and it is likely he has been buying it on weakness.
3) Greenlight reduced its stake in Marvell from 39.6 million shares to 26.4 million. The stock has been flat, and reported lackluster earnings, but rallied after the report. Greenlight still holds a 5.19% stake
4. SolarCity has been the most successful solar stock of the year, rising 58% so far in 2014. However, he thinks it is still undervalued and predicts it could go to $32. It is currently at $20. Greenlight holds a 7.85% stake.
