Einhorn Doesn't Like Bugs

At least not of the Volkswagen variety. A recent article in the Wall Street Journal explains why:

Numbers normally speak for themselves with investment returns. It is a rare case when no figure can portray the full impact.

Hedge-fund manager David Einhorn (left), of New York’s Greenlight Capital, in a recent investor letter listed in a table the internal rate of return of 14 positions he closed in the first quarter. A bearish bet on jewelry retailer Zale generated a return of 92% and another on U.S. Bancorp returned 78%, Greenlight said in the May 1 letter. Then there were investments in companies such as Dr Pepper Snapple Group and Aldar Properties that generated losses of 46% and 91%, respectively, it continued.

But for the by now infamous Volkswagen trade, which dealt a punishing blow to hedge-fund managers around the world last year, Greenlight didn’t list a figure. It simply said, “bad.”

The only additional explanation it gave: “a relatively small position that caused a large loss.”

The article goes on to say that the position ending up costing Greenlight over one percent of its performance for the year.

Einhorn's Portfolio and Latest Letter

Just for those that missed the post, or haven't read the letter, SeekingAlpha lists Einhorn's positions. For the full article, go to the site; for the good stuff, read on:

...Greenlight Capital's top five long equity positions were Allegheny Energy (AYE), Arkema (ARKAY.PK), Criteria Caixa, Österreichische Post, and URS Corp.(URS), and that it had an average exposure of 76% long and 37% short.

During the last quarter, it sold out of its long position in Ameriprise Financial. Additionally, it covered the following short positions: American Reprographics (ARP), Aurelian Resources (AUREF.PK)(Canadian), Equinix (EQIX), Great Atlantic & Pacific Tea (GAJ), Itron (ITRI), Macquarie Airports (MQRSF.PK)(Australian), and McGraw-Hill (MHP).

It also added some new long positions in the last quarter. These additions include Allegheny Energy (AYE), Commscope (CTV), MEMC Electronic Materials (WFR), gold and an index of gold miners (GDX), and the Japanese Yen.

Additionally, Greenlight also mentions that it was buying bank debt, high yield bonds, convertible bonds, gold, select foreign currencies, and equities. It’s also interesting to note that Greenlight was short Volkswagen and got caught up in the massive short squeeze...

As for Einhorn's latest letter, which I strongly recomend reading, click here. (An older letter, is online at the Dealbreaker site.)