Tuesday, January 17, 2017

Greenlight Capital Q4 2016 Letter, L/S perspective

Greenlight Capital (GC) Q4 letter, is a good read-always and especially now. Einhorn has remarkable prescience and he didn't do too badly either. GC generated 9% of gross alpha for 2016.

He has lost money on shorts, shorting tobacco firm Reynolds American (RAI). Shorting tobacco "can be hazardous to portfolio health" and it was.

His leading long winners were CONSOL Energy (CNX), CC, Time Warner (TWX), GM, Michael Kors (KORS) and Apple (AAPL). He considers GM, now trading at less than 6X earnings, undervalued.

Greenhorn likes the prospects of Bayern (BAYN) whether it will complete a proposed merger with Monsanto or not.

Short: oil frackers, which are not helped by the proposed tax-cuts of the Trump Presidency since "they don't pay much taxes". O&G "drill-baby-drill" prospects in the Trump era would lead to investing more money while oil prices would still be down. GC is short on CAT. "Even in an U.S. infrastructure boom, CAT is overpriced."

GC is is also short the "bubble basket". That includes NETFLIX (NFLX) whose "domestic market has matured." Einhorn doesn't believe NFLX large investments in paid content creation have paid off. I disagree with that, I think as more content gets consumed on mobile, there's more for Netflix.

Gold is another holding for GC. Gold is a typical safety flight asset.

                                                      GM: Good Buy ?


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