Oh No: Here’s How Much Worse It Got For David Einhorn In February

Well, we already knew it was bad for David Einhorn in February, we just didn’t know how bad.

On February 21, during the Greenlight Re call, Einhorn admitted he’s “never underperformed like this” and provided a bit of color on how things went in February.

The environment in February “remained difficult for the portfolio” he said, adding that it “didn’t underperform materially” considering the longs (so I guess that latter bit was supposed to be a positive?).

Here’s the full quote from the Greenlight Re call:

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. We are managing the growth exposure prudently while maintaining exposure to the fundamentally challenged shorts that hurt us. The Greenlight reinvestment portfolio is currently about 102% gross long, by 69% gross short. While the environment has remained difficult with gross stocks accelerating their outperformance against value stocks this year including February, we think reversion maybe finally coming soon.

Corporate tax cuts are a benefit to companies with profits which are a hallmark of our loan portfolio. Higher interest rates are beginning to offer investors an alternative they haven’t had in many years and should render uncertain future profits of our business and story stocks less valuable. The valuation spread between our longs and our shorts is incredibly wide.

As I put it in a post for Dealbreaker:

I don’t know, but something tells me David’s “partners” are still pretty goddamn “frustrated” (as he put it in his last quarterly letter).

Well now we know what the numbers were for February and they weren’t great.

According to a client update seen by Bloomberg (and CNBC), Greenlight Capital fell 6.2% during the month. So that would mean he’s down more than 12% for the year.

As Bloomberg dryly notes, the S&P was down 3.7% last month (including reinvested dividends), putting this year’s gains at 1.8%, while the HFRX Global Hedge Fund Index dropped 2% in the latest month.

We don’t want to rub this in any further, but if you compare that 12% YTD loss to the following chart (current through February 20), it doesn’t stack up particularly well:

But hey, it could be worse I guess from an optics perspective. David could have been massively short Herbalife for the past five years and been forced to capitulate on a bet he swore he would take to “the ends of the earth“.