One step forward, one step back.
So it goes for Greenlight Capital. The hedge fund headed by David Einhorn lost 1.2 percent in August, trimming its gain for the year to 5.7 percent. Last month, the S&P 500 and the Nasdaq Composite rose 2.6 percent and 3.9 percent, respectively.
Greenlight’s top holdings enjoyed mixed success in August. But its losers posted double-digit declines.
For example, embattled California utility PG&E tumbled nearly 24 percent after falling 20 percent on Monday alone, its worst single-day loss since the early days of Covid. It was rocked when state legislators refused to shield the utility from wildfire-related lawsuits.
Annuities specialist Brighthouse Financial declined by nearly 16 percent last month. Aquarian Holdings’ planned $4.1 billion acquisition of the company is on shaky ground in light of the federal government’s investigation into Mark Walter’s use of life insurers. Aquarian is run by a former executive at Guggenheim Partners, of which Walter is chief executive officer.
Elsewhere, PENN Entertainment, a provider of integrated entertainment, sports content, and casino gaming, was down about 18.5 percent in August.
Fortune Brands Innovations, a position Greenlight established in the second quarter, dropped more than 10 percent in August and was off by 19 percent from its peak price on June 30. Still, Greenlight told clients in its second-quarter letter it had paid an average of $39.37 per share for its stake in the building products company, below Monday’s close of $44.33.
“Over the past several years, both a challenging housing market and poor execution by prior management led to share losses and profit erosion,” Greenlight wrote. “Despite these challenges, we believe the company’s brands remain strong and its competitive position is intact.”
Another new position is also in the black: Shares of Comcast jumped more than 11 percent last month. The stock is up by the same amount from Greenlight’s entry point of $23.91, which works out to just five times cash flow. Greenlight stressed in the letter that this valuation “significantly undervalues its free cash flow generation and the collective value of its businesses.” Sure enough, at the end of the second quarter, Comcast announced the spin-off of NBCUniversal.
Greenlight had other winners in August.
Its big bet on gold worked out, as the price jumped nearly 10 percent last month, according to GoldPrice. Coal giant Core Natural Resources was up about 27 percent. Greenlight increased its stake in the company by 23 percent in the second quarter. Construction and engineering company Fluor climbed almost 9 percent in August. And homebuilder Green Brick Partners, by far Greenlight’s largest long position, picked up nearly 9 percent.
