A founder of Greenlight Capital, a long-short equity hedge fund, David Einhorn has been a well-known name in the investing world since 1996. Einhorn used different investment strategies in his career but commonly opted for a value investing approach. David Einhorn’s portfolio is currently valued at $2 billion and has 39 holdings.
Although a portfolio with 39 holdings can be considered diversified, Einhorn’s biggest holding, Green Bricks Partners, takes 31% of the entire portfolio. Other major holdings are Consol Energy Inc., Brighthouse Financial, and Kyndryl Holdings. Latest trades include a new holding of Alight Inc Class A stocks (NASDAQ:ALIT) and the selling of the whole Southwestern Energy Company (NYSE:SWN).
Stay with us while we analyze David Einhorn’s key holdings, sector allocation, and fund performance. We will also go through his investment philosophy and strategies which can reveal the process through which he generated more than 20% annual returns for more than two decades.
Greenlight Portfolio
Key Holdings
- Green Brick Partners Inc (NYSE:GRBK) with 31% of the portfolio
Einhorn likes to have a large chunk of Green Brick Partners stocks, while he waits for the right opportunity to trade them. In 2023, he sold 14 million shares for $51 while he bought those shares a year earlier for $23. Later in 2023, he conducted a similar trade, with modest success. Since Q4 2014 when he started investing in this holding, he spent $272 million on it, while its current value is $634 million. This proved to be a great deal for Greenlight, bringing 133% gains so far. Greenlight currently owns 11.4 million shares in the company.
- Consol Energy Inc (NYSE:CEIX) with 8.1% of the portfolio
Einhorn owns 2.11 million shares in the company and during 2023 he conducted several well-timed trades. During 2022 and at the beginning of 2023 he increased his position while the price was between $25 and $70, and in late 2023 he offloaded almost 800 thousand stocks for prices between $80 and $102. His total investment in this holding over the years was $37.3 million, while the current value is $167 million. Consol Energy generated a total of 348% gains so far.
- Brighthouse Financial Inc (NASDAQ:BHF) with 7.09% of the portfolio
Einhorn started trading Brighthouse Financials stocks in 2017 and he now owns 3.04 million stocks. While he bought the majority of stocks for a price between $48 and $57 he was selling them in 2022 and 2023 for prices between $39 and $50. This trade didn’t prove to bring much new value, due to its negative returns of 15%. Einhorn invested $172 million, while his current stake is valued at $145 million.
- Kyndryl Holdings Inc (NYSE:KD) with 6.54% of the portfolio
Einhorn added Kyndryl to his portfolio in Q4 2021, and he continued to increase his position until Q4 2022. Until then he fortified his position with 9 million stocks. In 2023 he started trimming this holding and he sold over 4.5 million shares. Right now he owns 6.36 million shares valued at $134 million, while his investment was at a reported $82.4 million. This holding produced a 63% gain so far.
- Tenet Healthcare Corp (NYSE:THC) with 5.86% of the portfolio
This is a new Greenlight holding dating to Q4 2022. This position holds 1.32 million shares valued at $120 million, while the investment was worth $71 million. So far, this investment brought 70% returns.
- ODP Corporation (NASDAQ:ODP) with 4.45% of the portfolio
The stake in this company cost Einhorn $76.4 million, while the current value is at $91.4 million. He owns a total of 1.75 million stocks, and in 2023 he bought and sold them on two occasions. So far these trades brought 20% returns to the investors.
Sector
The current sector allocation of Einhorn’s portfolio is:
- Consumer Cyclical with 36.78% of the portfolio
- Energy with 17.04% of the portfolio
- Financial Services with 11.44% of the portfolio
- Healthcare with 11.08% of the portfolio
- Technology with 10.78% of the portfolio
- Industrials with 3.38% of the portfolio
- Materials with 3.34% of the portfolio.
David Einhorn Portfolio Performance Analysis
Historical Portfolio Performance
The first decade of Greenlight Capital proved to be the most lucrative years for the fund. The fund delivered annual returns well over 20%, often being closer to the 30% mark. But, between 2009 and 2018 the S&P 500 constantly delivered higher returns than Einhorn’s fund.
But in recent years the fund seems to be back on track. In 2022 and 2023 the fund returned 36.6% and 22.1% respectively, managing to beat the index. Although AUM fell from a 2018 maximum of $12.7 billion to a current $2 billion, things are starting to turn.
In 2023 Einhorn managed to lose 25.6% on 4 major short positions, but his long positions were up 48% which saved the day.
Risk Management Practices
Einhorn’s core investment principle is value investing. Like all value investors he is looking to buy companies below their true value. He is conducting deep analysis and checks of the company’s fundamentals to determine its worth. Once he buys cheap he already created a hedge against sudden market movements.
His long/short equity strategy also lowers the risk by taking both long and short positions at the same time. That way he can benefit from both bull and bear markets.
Einhorn also pays much attention to position sizing and portfolio diversification. He doesn’t like to have positions that can be a risk to a whole portfolio. So, he diversifies his investments along different sectors, in case of a market downturn in a sector that doesn’t inflict major damage.
Another key investment principle that helps in mitigating risk is avoiding leverage. Many investors often take leverage when they want to amplify their investment efforts. Einhorn avoids that and that way does not have a leverage risk.
David Einhorn Investment Philosophy and Strategies
David Einhorn is a value investor who also employs long/short equity strategies, and from time to time jumps into activist investments.
While he prefers to deep-analyze his investment targets and look for potential long-term profit, he is also known for his preference for stock shorting. One of his famous shorts was of the Lehman Brothers stocks in 2007 when he earned a reported £1.7 billion.
Before he sets his sights on a specific investment he conducts a deep analysis of the company’s fundamentals. He is rigorous in analyzing financials like balance sheets, income statements, and cash flow. Also, he is looking for potential advantages over the competition, and the overall competitive landscape.
Once he finds a company that has potential, he is looking to identify its real value. He is willing to invest when the stock price is at a discount price to its intrinsic value. That also works as a risk management technique that can lower losses.
But, what sets him apart from most value investors is his exit strategy. Most value investors buy for the long haul, but Einhorn has a developed plan to exit the company from the start. He sets his expectations from the investments and once he fulfills them, he exits. He usually exits once the market recognizes the true value of the stocks when he can sell them at a much higher price.
Take A Look At David Einhorn Greenlight Capital – Strategy, Portfolio, Analysis:
FAQs
What Does David Einhorn Own?
David Einhorn owns Greenlight Capital. The company currently has an AUM of over $2 billion with 39 companies in their portfolio. In 2011 he tried to buy a minority stake in the New York Mets, but that deal was canceled in the end.
Is David Einhorn a Billionaire?
According to several reports, David Einhorn is a billionaire, but the final figure differs between sources.
How Much Is David Einhorn Worth?
According to Investopedia, his net worth is over a billion $, but Zac Johnson reports the value is between $1.5 billion and $2.2 billion.
Final Thoughts
David Einhorn comes from a family of investors, with his father and brother being in the business for decades. They share the same interests, and David Einhorn has proved his mettle in the investment world.
He is employing a unique mix of different strategies, with a focus on value investing, long/short equity, and even activist investing. His fund, Greenlight Capital in the first decade delivered high returns, easily beating the S&P 500 index. In the 2010s the returns were down, mostly due to setbacks in the shorting trading moves.
But in the last couple of years, the performance was well above average and the fund showed glimpses of its former glory. Will Einhorn drop his shorting approach for more successful value investing and activist targets, only time will tell.
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