Greenlight Capital posted a strong 3.2 percent gain in November and is now up 5.9 percent for the year.
This is the value-driven hedge fund’s third straight profitable month after declining for four months in a row.
The results are positive given Greenlight founder Davide Einhorn’s general bearishness all year even as the S&P rose more than 16.5 percent.
But as Institutional Investor earlier reported, Greenlight slashed its short exposure to 60 percent at the end of September from 93 percent at the end of June.
As a result, at the end of the third quarter, the short exposure was lower than the 67 percent position at the end of the first quarter.
The hedge fund’s largest long positions had mixed results overall in November, but three of its five largest positions were up solidly for the month.
Annuities seller Brighthouse Financial was up nearly 15 percent in November. On November 6 Aquarian Capital announced it will acquire Brighthouse for $70 per share in an all-cash deal valued at about $4.1 billion. The stock started moving up sharply in late October on reports of the impending deal.
Home builder Green Brick Partners, Greenlight’s largest long position for several years, was up 8.5 percent last month. It accounted for 27 percent of the hedge fund firm’s U.S.-listed long portfolio as of the end of the third quarter, according to its most recent 13F filing.
Belgian chemicals giant Solvay was up 3.2 percent last month.
Greenlight also got a boost from California utility Pacific Gas &Electric, a new medium-sized position established in the third quarter. The stock, now its seventh-largest U.S. long, was up 1 percent last month and up 6.4 percent from the $15.15 per share price Greenlight said it paid.
Greenlight noted in its third quarter client letter that the January wildfire in Los Angeles consumed most of the California Wild Fire funds the utility shares with Edison International, which was involved in the disaster. Although PG&E was not affected, its earnings multiple collapsed to 8 times. “We invested with the view that the legislature was likely to put in place funding support for the California Wildfire Fund and make further wildfire risk reform a priority,” Greenlight told clients in the letter. The firm added that since it invested in the stock it has seen positive progress on a number of key initiatives, including this one. It believes that as tail risk recedes, PG&E’s shares “should close the discount” to the nearly 18 times average multiple for the sector.
Two other top holdings had smaller gains last month. Coal giant Core Natural Resources was up 1.3 percent while packaging company Graphic Packaging gained 1.2 percent.
Otherwise, several top holdings were down sharply.
For example, Fluor Corp., the engineering and construction giant which became Greenlight’s second-largest U.S. listed long in the second quarter, was down 12 percent for the month. It had gained 15 percent in October. Greenlight boosted its stake in the stock by 44 percent in the third quarter.
Lanxess, the German specialty chemicals company and a top-five holding, was down 17 percent in November.
Kyndryl Holdings was down nearly 11 percent last month. Greenlight boosted its stake in the information technology infrastructure services provider by 31 percent in the third quarter.
