David Einhorn, the renowned hedge fund manager and founder of Greenlight Capital, known for his prescient call on the 2008 Lehman Brothers collapse, is once again making waves in the stock market. After a period of cautious inactivity, Einhorn is actively seeking new investment opportunities, signaling a potential shift in market dynamics as we head into 2024.
In a recent investor letter, Einhorn revealed that he had ended his “buyers’ strike,” a strategic pause in stock acquisitions due to escalating geopolitical tensions. This conservative approach, while prudent, meant that Greenlight Capital missed out on the robust rally that closed out 2023. Despite this, the fund still posted a respectable 22.1% return for the year, just shy of the S&P 500’s 24.2% gain.
Einhorn’s investment strategy has always been a blend of cautious analysis and bold moves. His fund, which saw a 4.3% dip in the fourth quarter, was affected by the market’s unexpected surge, particularly impacting his short positions. “Bubblelike conditions returned for the most speculative stocks and a handful of our shorts went parabolic,” Einhorn explained.
A Cornell graduate, Einhorn started Greenlight Capital in 1996 and quickly established a reputation for delivering exceptional returns, averaging 26% annually over the next decade. His knack for identifying undervalued stocks and successful short selling has made him a prominent figure on Wall Street.
Looking ahead, Einhorn is diversifying Greenlight’s portfolio with several promising investments. He’s taken medium-sized positions in Alight Inc (ALIT), a software company specializing in health, payroll, and HR solutions, and Viatris, a drugmaker spun out from Pfizer Inc (PFE). Alight, which has been steadily growing its revenue and profits, saw a modest 2% stock increase last year. Viatris Inc (VTRS), on the other hand, has faced a decline since its inception but is showing signs of stabilization and growth, according to Einhorn.
Einhorn has also invested in Syensqo SA (EBR: SYENS), a Belgian chemicals company known for its lightweight composite materials essential in modern commercial and defense aircraft. Beyond these individual stocks, Einhorn is also building a significant, yet undisclosed, position that he anticipates will become one of his top five holdings.
In response to the current geopolitical climate, Einhorn has strategically acquired small positions in two ETFs focused on defense stocks, anticipating growth in this sector due to escalating conflicts and the need to replenish military supplies.
Einhorn’s latest moves reflect his adaptability and keen market insight. As we navigate the uncertainties of 2024, Einhorn’s strategies offer valuable lessons for investors looking to balance risk with opportunity in a rapidly evolving market landscape.
