Hedge fund Greenlight Capital's strong fourth quarter gains lift 2020 return to 5.2%

FILE PHOTO: David Einhorn, President, Greenlight Capital, Inc. speaks during the 2019 Sohn Investment Conference in New York City, U.S., May 6, 2019. REUTERS/Brendan McDermid

BOSTON (Reuters) – Greenlight Capital ended 2020 with a 5.2% gain thanks to a dramatic fourth quarter comeback when bets on a homebuilder, jet leasing company and home security services company turned into a 25% return, the firm said in a letter to investors on Thursday.

The hedge fund, run by David Einhorn, lagged far behind the broader S&P 500 index’s 18.4% gain but celebrated its late year surge which it described as “the best quarterly result in Greenlight’s history.” Reuters obtained a copy of the letter.

Homebuilder Green Brick Partners, jet leasing company Aer Cap Holdings and relatively new positions in Resideo Technologies, NCR Corp and Change Healthcare fueled the portfolio’s gains as optimism about a vaccine roll-out and a conclusion to the U.S. presidential election pushed stocks to new highs.

Greenlight also said that it invested in streaming provider FuboTV and biopolymer manufacturer Danimer Scientific, which both went public in recent months.

Einhorn, who is well-known for his long-running short bet against Elon Musk’s Tesla, said the fund “managed to sidestep” most of electric car company’s late year run-up but acknowledged that the stock was still the firm’s biggest loser last year. Tesla’s stock surged roughly 733% in the last 52 weeks.

The letter also highlighted Einhorn’s whistleblower award from the U.S. Securities and Exchange Commission, received in November after he pushed for it, noting that the regulator had agreed with the firm’s analysis of problems at land developer The St. Joe Company more than a decade ago, ultimately fining it for improper accounting of its real estate assets.

Looking ahead to this year, Greenlight said it is positioned for higher inflation, a strong housing market and rising interest rates.

“If things generally go this way, value stocks should continue their recent outperformance. We are excited to turn the page into 2021,” the letter said.

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