Einhorn Says Greenlight Posts Worst Underperformance Since 2000

• February 21 2018
• Simone Foxman

Hedge fund manager David Einhorn said a shift in favor toward value stocks may soon be coming even after his firm posted its worst underperformance in almost two decades.

Hedge fund manager David Einhorn said a shift in favor toward value stocks may soon be coming even after his firm posted its worst underperformance in almost two decades.

“While we’ve never underperformed like this, our prior worst underperformance compared to the S&P came in March of 2000, which was a similar environment," Einhorn said Wednesday in a conference call discussing results for Greenlight Capital Re Ltd., the Cayman Islands-based reinsurer where he is chairman.

“While the environment has remained difficult with growth stocks accelerating their outperformance against value stocks this year including February, we think a reversion may finally be coming soon," he added.

Poor investment returns and underwriting results have put pressure on the reinsurer’s shares, which have tumbled 15 percent this year. In January, the reinsurer’s investment portfolio dropped 5.5 percent as a rise in stocks it was betting against outpaced gains in the long portfolio.

The performance is the latest setback in a difficult few years for Greenlight. After losing more than 20 percent in 2015, the firm has struggled as it has stuck to its value-investing strategy. His wagers include shorts against a “bubble basket” of technology stocks.

— With assistance by Hema Parmar, and Brian Louis