Einhorn hedge fund Greenlight wins out of momentum shift

David Einhorn’s Greenlight Capital hedge fund has emerged as one of the big winners from the shift out of momentum stocks in September.

The value-focused hedge fund posted an 8.4 per cent return in September across its funds, according to a person familiar with the firm, bringing its year-to-date performance to 24 per cent.

Greenlight has large positions in so-called value stocks such as US carmaker General Motors and aircraft leasing company AerCap, which had fallen out of favour with investors in pursuit of more growth-oriented companies.

Mr Einhorn is clawing back performance after a particularly tumultuous 2018 when his hedge fund ended the year down 34 per cent, marking its worst year ever.

“Nothing went right for the entire year,” Mr Einhorn wrote in a January letter to investors. The seasoned hedge fund manager said he would focus on smaller positions in future.

September saw a shift out of highly popular momentum stocks triggered by a rise in bond yields which analysts dubbed the “momentum crash”. The turbulence was short lived but investors lost out as the market unexpectedly shifted and almost all of the year’s hottest stocks took a hit.

Greenlight’s performance was also boosted by short positions taken out on technology stocks such as Netflix, and a long-held short position on Tesla, which this year has been among the hedge fund’s best performing bets.


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