Greenlight Capital

Last updated
Greenlight Capital
Company type Private company
Industry Investment management
Founded1996;28 years ago (1996)
Founder David Einhorn
Jeffrey A. Keswin
Headquarters
New York City
,
United States
Key people
 David Einhorn
Products Hedge fund
AUM Decrease2.svg US$1.6 billion
(as of March 30, 2020) [1]
Number of employees
25
Subsidiaries
  • Greenlight Capital Re, Ltd
  • Greenlight Masters
  • Greenlight Private Equity Partners
Website www.greenlightcapital.com
Greenlight Capital Re, Ltd.
Company type Subsidiary
Nasdaq:  GLRE (Class A)
Russell 2000 Component
Industry Reinsurance
Founded2004 (2004)
FounderGreenlight Capital
Headquarters Dublin, Ireland and Cayman Islands
Website greenlightre.com

Greenlight Capital is an American hedge fund founded in 1996 by David Einhorn. Greenlight invests primarily in publicly traded North American corporate debt offerings and equities. [2] Greenlight is most notable for its short selling of Lehman stock prior to Lehman Brothers' collapse in 2008 [3] and the $11 million fine they received in January 2012 for insider trading in the UK. [4] Einhorn remains the fund's manager.

Contents

It also operates Greenlight Capital Re, a property casualty reinsurer. [2] Unlike other funds, Greenlight does not use borrowed money, or leverage. The firm does not generate large trading volumes. [3] It also manages a fund of funds and a private equity fund through its affiliates, Greenlight Masters and Greenlight Private Equity Partners.

As of 2008, there were 25 employees, including nine analysts and one trader. It occupies a single high floor of an office building near Grand Central, in New York City. [3]

History

Foundation and early years

Founded in 1996 by Einhorn, with $900,000 (half borrowed from Einhorn's parents). [5] Greenlight generated greater than a twenty-five percent annualized net return for its investors until 2007, but lackluster results later brought this to under fifteen percent [3] It prospered in its early days by identifying weak financial firms for short selling, making significant gains from Conseco, CompuCredit, Sirrom Capital, and Resource America. [3]

A few months before the dot-com bust, Greenlight lost 4% of its total capital on a short on Chemdex stock as it soared in price. A few months after Greenlight closed its position, Chemdex stock plunged to $2. [3]

2007–2008 financial crisis

In the third quarter of 2008, Greenlight lost 15% of its value, [6] primarily from long positions on industrial companies like Helix Energy Solutions, [6] [7] when the SEC temporarily banned short selling of financial stocks. [8] With the majority of Greenlight's money in bonds and long positions on stocks, this stopped hedge funds minimizing 'long' losses or offsetting them with short gains. [9] Greenlight ended 2008 down 23%, its first annual loss. [10] In 2009 Greenlight recouped its losses from 2008. [11]

Einhorn and Greenlight Capital were fined by the FSA for insider trading in January 2012. [12]

2015–2020 underperformance

Greenlight Capital was down 20 percent for 2015. [13]

In February 2015, Greenlight Capital was ranked 53rd out of 58 hedge funds, with a D grade, in the Institutional Investor's Alpha Hedge Fund Report Card. This was the second year in a row Greenlight Capital received a D from IIA. [14]

Greenlight Capital greatly underperformed the bull market in 2017. For January 2018, Greenlights funds were down 6% for the month where the S&P 500 was up 5.6%. [15] [16]

In March 2020 the fund posted loss of 21.5% as the global coronavirus pandemic drove the stock markets down. [17]

Top equity holdings

As of 2019, the top equity holdings of the firm were in the shares of the following companies: Green Brick Partners, Brighthouse Financial, Ensco, General Motors, Exela Technologies, CONSOL Coal Resources, and Altus USA. [18]

Greenlight Capital lowered its stake in Apple by 6.2 percent to 8.6 million shares during the fourth quarter of 2014, despite Apple shares being up 15 percent in the year. [19]

Philanthropy

In 2009, Greenlight Capital donated $7.2 million to three charities: Tomorrows Children's Fund, the Center for Public Integrity (CPI) and the Project on Government Oversight (POGO). The Tomorrows Children's Fund received $2.6 million, CPI received $1.8 million, and POGO received $1.8 million. [20]

Political contributions

In 2012, Greenlight Capital ranked 5th out of WNYC's top 10 hedge fund political donors. The hedge fund contributed $592,729.88 to New York State political campaigns in 2012. [21]

Lawsuit with an ex-employee

In May 2024, a former employee at Greenlight Capital, James Fishback sued the hedge fund for defamation in a row over his job title. [22] James Fishback claimed he worked as “head of macro” at the New York hedge fund, but Greenlight Capital claimed that position never existed. [22] The controversy was covered in various news outlets. [22] [23]

Fishback said that in the two-and-a-half years he worked at Greenlight Capital, he was promoted twice; first from research analyst to trader and then to head of macro, having generated a total $100 million in profits for the New York fund during his tenure. [24] Morever, Greenlight Capital said it did have its "best year" in its macro portfolio in 2022, during Fishback’s tenure. [25]

On June 25, 2024 Greenlight Capital filed a suit in New York Court that the ongoing case with James Fishback over his job title is hurting its business. [26] Greenlight called on the New York court to place a “permanent injunction” on the ex-staffer; Fishback, to block him from referring to himself as its former “head of macro.” [26] Fishback described Greenlight Capital’s lawsuit as a desperate ploy by the hedge fund to save face. [26]

On August 22, 2024 the Foundation of Individual Rights and Education found that the University of Florida violated the First Amendment when Greenlight Capital demanded it to take action against a school club that had advertised James Fishback as the “Head of Macro”. [27]

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In January 2021, a short squeeze of the stock of the American video game retailer GameStop and other securities took place, causing major financial consequences for certain hedge funds and large losses for short sellers. Approximately 140 percent of GameStop's public float had been sold short, and the rush to buy shares to cover those positions as the price rose caused it to rise even further. The short squeeze was initially and primarily triggered by users of the subreddit r/wallstreetbets, an Internet forum on the social news website Reddit, although a number of hedge funds also participated. At its height, on January 28, the short squeeze caused the retailer's stock price to reach a pre-market value of over US$500 per share, nearly 30 times the $17.25 valuation at the beginning of the month. The price of many other heavily shorted securities and cryptocurrencies also increased.

References

  1. ↑ "Greenlight Capital Inc - Assets, Funds, Holdings" . No. Greenlight Capital. United States: AUM13F. AUM13F. 30 March 2020. Retrieved 5 September 2020.
  2. 1 2 "Green Light Capital, Inc. Company Information". Hoover's . Retrieved October 5, 2014.
  3. 1 2 3 4 5 6 Hugo Lindgren (June 15, 2008). "The Confidence Man". New York.
  4. ↑ Werdigier, Julia (25 Jan 2012). "Greenlight Capital to Pay $11 Million Fine in Insider Case". nytimes. Retrieved 23 July 2015.
  5. ↑ "Company Overview of GreenLight Capital, Inc". Businessweek. Archived from the original on June 8, 2008. Retrieved 3 June 2013.
  6. 1 2 "Hedge Funds Concede Errors, Profess Optimism After Worst Losses". Bloomberg. 14 October 2008.
  7. ↑ Avi Slazman (September 17, 2008). "David Einhorn Bulks Up on Helix Energy". Barron's.
  8. ↑ "SEC Halts Short Selling of Financial Stocks to Protect Investors and Markets". SEC.gov. September 19, 2008.
  9. ↑ Boyd, Roddy (3 October 2008). "Market chaos batters hedge-fund star". CNN. Retrieved 4 May 2010.
  10. ↑ "Greenlight Hedge Fund Lost 23% in 2008 on Helix, VW (Update1)". Bloomberg. 23 January 2009.
  11. ↑ Opalesque (30 October 2009). "Greenlight recoups losses from 2008".
  12. ↑ "Einhorn, Greenlight fined for market abuse". Reuters. 25 January 2012. Archived from the original on June 4, 2016.
  13. ↑ Hussain, Tabinda (31 December 2015). "Einhorn's Greelight Fund Ends Second-Worst Year Down 20%url=https://www.bloomberg.com/news/articles/2016-01-01/einhorn-s-greenlight-hedge-fund-ends-second-worst-year-down-20-/". Bloomberg.
  14. ↑ Celarier, Michelle (19 February 2015). "David Einhorn's Greenlight Capital just makes 'D' grade". New York Post. Retrieved 10 April 2015.
  15. ↑ Chung, Juliet (February 2018). "David Einhorn's Greenlight Capital Lost 6% in January". Wall Street Journal.
  16. ↑ David Einhorn's hedge fund is getting crushed because of ill-timed bets against Amazon, Tesla during market surge
  17. ↑ "Hedge fund Glenview off 30% as coronavirus weighs on portfolio". Reuters. 3 April 2020. Retrieved 27 April 2020.
  18. ↑ "Greenlight Capital - Latest 13F Holdings" . Retrieved March 24, 2019.
  19. ↑ Ablan, Jennifer. "Greenlight Capital scales back on Apple shares ahead of rally". No. 13 February 2015. Yahoo Finance. Retrieved 10 April 2015.
  20. ↑ "Greenlight's Einhorn says shorting Moody's". Reuters. 28 May 2009. Retrieved 27 April 2020.
  21. ↑ Alcorn, Stan (18 April 2012). "Who's Who in Hedge Funds: NY's Top 10 Political Donors". wnyc. Retrieved 23 July 2015.
  22. 1 2 3 Louis Goss, "SGreenlight Capital's clash with an ex-employee has captivated the hedge-fund world". fnlondon.com. Retrieved 22 May 2024.
  23. ↑ Bradley Saacks, "David Einhorn was once the young thorn in the side of executives. Now he's dealing with his own". businessinsider.com. 17 May 2024. Retrieved 21 May 2024.
  24. ↑ Louis Goss, "Greenlight Capital's clash with a former employee has captivated the hedge-fund world". marketwatch.com. 20 May 2024. Retrieved 17 June 2024.
  25. ↑ Jack Raines, "Schrödinger's head of macro". sherwood.news. Retrieved 17 June 2024.
  26. 1 2 3 Chris Dolmetsch, "Einhorn's Greenlight Slams 'Head of Macro' in Fresh Lawsuit". bloomberg.com. 25 June 2024. Retrieved 4 September 2024.
  27. ↑ "University of Florida: Administrators Force Student Group to Take Down Instagram Post". thefire.org. Retrieved 4 September 2024.
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