David Einhorn Greenlight Capital reveals hedge fund new position and losses.
David Einhorn Greenlight Capital Inc. said its hedge funds posted a 3.2% loss, net of fees and expenses, during the second quarter, as turmoil in Europe helped drive down some of the firm’s biggest stock holdings. “Like the market, the partnerships gave back a portion of our first-quarter gains,” Greenlight wrote in a July 23 letter to investors. “Some of the biggest winners from the first quarter, including Arkema, General Motors and our yen position, were among our biggest losers in the second quarter.” Greenlight unveiled “substantial new positions” in Cigna Corp. and Coventry Health Care Inc., noting that the managed-care sector has been beaten down “in anticipation of Obamacare.” An election outcome that could result in changes to his health-care law creates addition potential for gains, the letter said. The firm said its biggest winner during the second quarter was its short position in Green Mountain Coffee Roasters Inc., a coffee-maker Mr. Einhorn has criticized publicly. Once a stock-market darling, the company has had a rougher time of it since Mr. Einhorn’s hour-long presentation criticizing the company at the Value Investing Congress in New York last fall. Key patent losses on Green Mountain’s coffee pods, known as K-cups, are beginning to wear on investor confidence, the letter said, adding that the K-cups prices were already falling. Greenlight dumped its stakes in Dell Inc. and Best Buy Co., whose CEO, Brian Dunn, resigned in April during a probe into his personal conduct. “The company has an interim CEO and is trying to come up with a strategy. We worried that this could lead to additional business disruption,” the letter said, citing a collapse in international profits and a dwindling cash pile as other factors in the firm’s decision to close out its position. Greenlight also lost money on its stake in chipmaker Marvell Technology Group Ltd. Still, Marvell remains among Greenlight’s largest long positions; others include Apple, whose products Mr. Einhorn has said have the uncanny ability to cause consumers to buy more Apple products; General Motors; gold; and Seagate Technology. Greenlight’s funds posted a 3.4% net return during the first half of the year. That compares with a 1.9% gain by hedge funds on average during the same period, according to Hedge Fund Research, Inc.
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