(New throughout, adds details on portfolio, last year's
By Svea Herbst-Bayliss
BOSTON Jan 19 David Einhorn, whose Greenlight
Capital hedge fund ranked among last year's worst performers,
told investors on Tuesday that he has made new bets on stocks
including battered retailer Macy's and is currently
concentrating on delivering better returns.
Einhorn's fund, which had only one other losing year since
opening for business in 1996, tumbled 20.2 percent in 2015.
Acknowledging that "we have never had a year where so little
went right," Einhorn pledged that the firm would "concentrate on
trying to make better returns."
But whether the billionaire investor is succeeding some
three weeks into 2016 was not clear, considering he has already
lost money on the Macy's bet and three of his top five
investments, Apple Consol Energy and General
Motors are losing money this year.
The fund manager also explained what contributed to 2015's
loss, where he lost money every quarter and bet that Netflix
and Amazon, two of the best performing stocks,
would fall while losing stocks would gain.
In a letter sent to investors and seen by Reuters, Einhorn
said he paid $45.69 a share for its Macy's position, getting
into an investment where activist hedge fund Starboard Value has
been pressing the 158-year old retailer for months to sell off
some real estate holdings.
Macy's is trading at $39.01, up 11.7 percent this year, but
down from where Greenlight got in.
2016 should be better, Einhorn said, after unseasonably warm
weather and a strong dollar weighed on recent sales.
He is also holding open the chance for a change in the
company's structure, noting "it wouldn't surprise us if a
private equity firm teamed up with a REIT to buy the company and
unlock the value privately."
Greenlight bought generic pharmaceutical company Mylan for
$45.32, notching a nice gain with the stock currently changing
hands at $50.34 a share. Greenlight expects the company to earn
close to $7 a share in 2018, fueled by its robust pipeline of
respiratory, injectable and biologic drugs.
Last year was horrible for the fund, Einhorn acknowledged,
noting that he expected Amazon and Netflix, which surged ahead,
to fall while the stock he thought would gain actually fell. So
it was time to sell and the most noteworthy liquidation was
semiconductor company Micron Technology Inc, Greenlight's
biggest winner in 2014 and its biggest loser in 2015.
Greenlight ultimately made money on the bet, selling it at
roughly $22.14 a share after having paid $19.93 a share for the
Also gone are its investments in Bank of New York,
which generated a small gain, and a bet on Applied Materials
, which the fund exited at $18.21, with a small loss.
For now, Einhorn, who lets investors exit his funds only
rarely, said he has only "modest redemptions" and that a few
clients even wanted to add more money. But he is not accepting
new cash now. Known for his sense of humor, Einhorn closed the
letter with a quote from the late rock star David Bowie:
"I don't know where I'm going from here, but I promise it
won't be boring."
(Reporting by Svea Herbst-Bayliss; Editing by David Gregorio;
Editing by Chizu Nomiyama)