Reflecting the poor performance of the market in 2018, which was hurt by uncertainty surrounding the U.S.’s trade war with China and rising interests rates, billionaire hedge fund manager David Einhorn (Trades, Portfolio) posted his worst year ever since founding Greenlight Capital in 1996.
After seeing returns sink 9% in December, the New York-based firm’s main fund ended 2018 with a 34% loss, vastly underperforming the S&P 500’s 7% loss.
The value investor, who tends to buy stocks he believes are undervalued and waits for the price to rise, is also known for shorting companies the market favors. He rose to prominence when he shorted Lehman Brothers before its fall in the 2008 financial crisis. The guru has also shorted Tesla Inc. (TSLA, Financial), Amazon.com Inc. (AMZN, Financial) and several other tech giants.
His strategies did not pay off in 2018, however, as he posted 10 months of negative returns. In his third-quarter conference call, Einhorn cited short positions in an unnamed health care company and tech stock as main drivers of his poor returns. Electric vehicle maker Tesla, which he has compared to his call on Lehman Brothers, also did better than he expected, posting a 7% gain for the year.
As for his major investments, Einhorn’s three largest positions, which are automaker General Motors Co. (GM, Financial), insurer Brighthouse Financial Inc. (BHF, Financial) and homebuilder Green Brick Partners Inc. (GRBK, Financial), all struggled during the year.
As of Dec. 31, Detroit-based General Motors’ shares had tumbled approximately 18% for the year to $33.43.
Brighthouse Financial, which is headquartered in Charlotte, North Carolina, plummeted roughly 48% over the course of the year to close at $30.48 on New Year’s Eve.
Shares of Texas-based Green Brick Partners declined 36% to close at $7.24 on Monday.
The performance of Einhorn’s Greenlight has slowly deteriorated since 2015, when it lost more than 20%. According to GuruFocus data, the company then managed to scrape by with two positive years, returning 7% in 2016 and 1.5% in 2017.
See Einhorn’s portfolio here.
Disclosure: No positions.
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