David Einhorn speaks on April 3, 2024 in New York.
Adam Jeffery | CNBC
Hedge fund investor David Einhorn’s cautious stance throughout the year has hurt his results as he sees this as the most expensive stock market of his career at Greenlight Capital.
As of the end of the third quarter of 2024, Einhorn’s hedge fund had returned just 9% after fees and expenses. In comparison, the S&P 500 Index rose more than 20% during the same period.
The high-profile investor said he was neither calling the market a bubble nor outright bearish, but sky-high prices made him conservative.
“The market is not just hitting all-time highs,” Einhorn said in his latest investor letter last month. “In many ways, this is the most expensive stock market we have seen since Greenlight was founded.” Inhorn founded Greenlight in 1996.
Einhorn giving a speech CNBC holds Alpha Investor Summit Wednesday in New York City. It will be investors’ first chance since Einhorn’s election to see whether his views on stock valuations and inflation have changed in response to Trump and Republican policies.
After a buyer strike in late 2023, Einhorn returned to the market looking for opportunities, picking up mid-cap positions in companies including software company Alight and drugmaker Viatris. Investors will be interested to know whether he’s still finding any value.
Last month, he was bullish on Peloton, saying the stock was significantly undervalued.
The last third of the bull market?
However, these new stock picks don’t necessarily create a ton of alpha. Greenlight has been hurt this year by lower net exposure to the market and a lack of investment in the hot Magnificent 7 brand.
“We may continue to underperform the rising market, as we have throughout the year, but we do not want to expose ourselves to losses as the market continues to rise,” he said in the letter. “We believe Paul Tudor Jones Tudor Jones says the last third of a big bull or bear market is often the most difficult.”
S&P 500 Index, 5 years
At the same time, he has spent much of this year calling for a reacceleration of inflation, making gold a very important part of his portfolio. Despite slowing inflation, this bet has worked relatively well Spot gold hit a record high in late October and is up 27% this year.
Einhorn, a 55-year-old Cornell University graduate, founded Greenlight Capital nearly 30 years ago and over the next decade generated annualized returns of 26%, far outpacing the broader market and many of his peers. He then flourished during the financial crisis, predicting the collapse of Lehman Brothers. His impressive track record has made him one of Wall Street’s most closely watched hedge fund managers. In recent years, he has had some success buying value stocks with a buyback strategy.
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