David Einhorn speaks in New York City on April 3, 2024.
Adam Jeffrey | CNBC
Hedge fund investor David Einhorn remained cautious throughout the year, hurting his results as he navigated what he considered the most expensive stock market of his career at Greenlight Capital.
Einhorn’s hedge fund returned just 9% by the end of the third quarter of 2024, excluding fees and expenses. By comparison, the S&P 500 index rose more than 20% over the same period.
The prominent investor said he didn’t call the market a bubble and wasn’t overtly bearish, but that he was taking a conservative stance due to rising prices.
“The market is not just at an all-time high; by many measures, it’s the most we’ve seen since Greenlight was founded,” Einhorn said in his latest letter to investors last month. “It’s the most expensive stock market.” Mr. Einhorn founded Greenlight in 1996.
Einhorn will speak Wednesday at CNBC’s Delivering Alpha Investor Summit in New York City. Investors will have their first chance to hear whether Mr. Einhorn’s views on stock valuations and inflation have changed since his election and as Mr. Trump and Republican policy progress.
After the buyer strike at the end of 2023, Einhorn returned to market exploration, taking mid-sized positions at software company Alight and pharmaceutical company Viatris, among others. Investors will be interested to see if he still sees any value.
Last month, he made the bullish case that Peloton stock is significantly undervalued.
The last third of a bull market?
However, these new stock picks do not necessarily generate large amounts of alpha. Greenlight has been hurt this year by low net exposure to the market and a lack of investment in the popular Magnificent 7 name.
“While we will likely continue to underperform the market as we have for the past year, we do not want to be in a position where we lose money if the market continues to rise,” he said in the letter. “We think Paul Tudor Jones is right when he says that the last third of big moves in bull and bear markets is often the most difficult to manage.”
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S&P 500, 5 years
Meanwhile, he has spent much of this year calling for inflation to accelerate again, and gold has become a huge part of his portfolio. The bet has paid off relatively well despite slowing inflation, with spot gold hitting a record high in late October, up 27% this year.
Mr. Einhorn, a 55-year-old Cornell University graduate, founded Greenlight Capital nearly 30 years ago and over the next 10 years returned an impressive 26% annually, far outpacing the broader market and many of his peers. exceeded. He then predicted the collapse of Lehman Brothers and achieved success during the financial crisis. His stellar track record has made him one of Wall Street’s most favored hedge fund managers. In recent years, he has had some success buying value stocks using a buyback strategy.
