David Einhorn (Trades, Portfolio), founder of Greenlight Capital, returned 5.5% in the third quarter. Longs contributed 9.1% of the returns, and shorts detracted 2.9%.
Year to October, Einhorn’s strategies had a 2.3% return, trailing his 7.2% return in 2016 and beating his 20% loss in 2015 – his firm’s worst year in its history.
Einhorn’s frustration with his fund’s performance led him to say in his third-quarter letter to shareholders in October that he was questioning whether value investing was a “viable strategy.”
He then said on a third-quarter earnings call a week later that he had not changed his mind about using value investing.
“While most people understood the rhetorical argument the letter made on value investing, some misconstrued the letter as an abandonment of value investing as a strategy,” he said. “Nothing could be further from the truth. We have been challenged the last few years as value investing has faced headwinds. However, we believe we believe this is simply a cyclical phenomenon and do not plan to change our strategy.”
Einhorn rose to prominence when he predicted the collapse of Lehman Brothers and shorted the stock during the housing crisis. Known for publicizing his short positions, Einhorn currently has losing bets against Tesla (TSLA) and Caterpillar (CAT), which was one of his biggest detractors during the quarter.
Einhorn purchased eight new stocks in the quarter. The biggest were: Brighthouse Financial Inc. (BHF, Financial), Exela Technologies Inc. (XELA, Financial), Venator Materials Plc (VNTR, Financial), Tech Data Corp. (TECD, Financial) and Children’s Place Inc. (PLCE, Financial).
Brighthouse Financial Inc. (BHF, Financial)
Einhorn bought 6,792,028 million shares of the company, which had an average stock price around $60 for the third quarter.
Brighthouse Financial Inc has a market cap of $6.82 billion; its shares were traded around $56.91 Tuesday with and P/S ratio of 1.58.
Exela Technologies (XELA, Financial)
Einhorn bought 8,384,629 shares of the company, which had an average stock price around $7 for the quarter.
Exela Technologies Inc. has a market cap of $758.910 million; its shares were traded around $5.04 Tuesday with and P/S ratio of 2.08.
Ventaor Materials Plc (VNTR, Financial)
Einhorn bought 1.7 million shares of Venator Materials, which had an average price around $21 for the quarter.
Venator Materials Plc has a market cap of $2.53 billion; its shares were traded around $23.81 Tuesday with and P/S ratio of 1.06.
Tech Data Corp. (TECD, Financial)
Einhorn bouhght 90,000 shares of Tech Data Corp., which had an average price around $99 for the quarter.
Tech Data Corp. has a market cap of $3.45 billion; its shares were traded around $90.55 Tuesday with a P/E ratio of 17.03 and P/S ratio of 0.11. Tech Data Corp. had an annual average earnings growth of 18.3% over the past 10 years. GuruFocus rated Tech Data Corp. the business predictability rank of 2.5-star.
Children’s Place Inc. (PLCE, Financial)
Einhorn purchased 66,400 shares of Children’s Place, which had an average price around $107 for the quarter.
Children's Place Inc. has a market cap of $2.23 billion; its shares were traded around $126.30 Tuesday with a P/E ratio of 17.93 and P/S ratio of 1.26. The trailing 12-month dividend yield of Children's Place Inc. is 1.10%. The forward dividend yield of Children's Place Inc. is 1.22%. Children's Place Inc. had annual average earnings growth of 7.8% over the past five years.
See David Einhorn (Trades, Portfolio)'s portfolio here.
