This content is from: Portfolio

Morning Brief: Greenlight’s Short Holdings Drop Amid Market Selloff

It was a rough day for the stock market, but a good day for David Einhorn’s flagship hedge fund, at least in its short book.

Monday is just what David Einhorn has waited for…and desperately needed. Many of the high-profile short bets that badly hurt his hedge funds at Greenlight Capital fell more than even the market averages. Netflix dropped 4.92 percent, to $254.26; Caterpillar dropped more than 4 percent, to $151.08; Tesla fell 3.1 percent, to $333.13; Amazon.com dropped 2.8 percent, to $1,390; and Pioneer Natural Resources dropped 3.9 percent, to $171.82. Alas, some of Greenlight’s largest longs got hammered too. Brighthouse Financial, its largest recently added position, fell nearly 5 percent. Seems Einhorn still can’t catch a break.

___

Starboard Value has raised concern about the long-term pattern of insider selling by the board of directors of Mellanox, an Israeli chipmaker. In a letter to chairman Irwin Federman, Peter Feld, managing member of the activist hedge fund, criticized “the frequency and magnitude” of the selling, calling it “staggering and among the most one-sided we have ever seen.” He said it raises “serious questions” about the board’s commitment and the level of confidence the board has in management’s operating plan.

Feld said that since the company’s IPO in 2007, there have been more than 370 sales of stock by the current management team and board, resulting in $130 million in proceeds. During that same period, there was just one open-market purchase. Feld also pointed out that the average sale price for all 373 sales is nearly 50 percent below today’s stock price.

“What strikes us as most concerning is that Mellanox’s pattern of insider selling has continued, and even intensified, following management’s release of full year guidance in December 2017, which marked the first time Mellanox had ever given annual guidance,” Feld added. Since then, members of management and the board have sold $4.3 million worth of shares, he went on to say. “We believe that Mellanox is a fantastic investment today, with substantial opportunities to meaningfully outperform its peers going forward, and we are excited to be the company’s largest shareholder,” he added, once again calling on management to engage in some sort of dialogue with Starboard.

___

Bank activist Lawrence Seidman has identified a new target. The Parsippany, New Jersey investor, whose firm Seidman & Associates specializes in taking aggressive positions in small community banks, disclosed he owns 5.1 percent of Coastway Bancorp, which has nine branches in Rhode Island. In a new 13D filing, Seidman said he originally purchased the shares because he thought they were undervalued. He also said he has had several conversations with the bank’s president and chief executive officer and discussed ways to maximize shareholder value. Seidman did not provide any other information or insight into the nature of the discussions.

Related Content