Greenlight Capital

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Greenlight Capital
Industry Investment management
Founded 1996
Founder(s) David Einhorn
Jeffrey A. Keswin
Headquarters New York City, U.S.
Products Hedge fund
AUM $5 billion[1]
Website www.greenlightcapital.com

Greenlight Capital is a hedge fund founded 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]

Founded in 1996[4] with $900,000 (half borrowed from Einhorn's parents), Greenlight has generated greater than a twenty-five percent annualized net return for its investors.[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] It also manages a fund of funds and a private equity fund through its affiliates, Greenlight Masters and Greenlight Private Equity Partners. 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] In June 2008 there were 25 employees, including 9 analysts and 1 trader. It occupies a single high floor of an office building near Grand Central, in New York.[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]

In the third quarter of 2008, Greenlight lost 15% of its value,[5] primarily from long positions on industrial companies like Helix Energy Solutions,[5][6] as the SEC temporarily banning short selling of financial stocks.[7][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 on the 25 January 2012.[12]

Top equity holdings[edit]

As of 2013, the top equity holdings of the firm were in the shares of the following companies: Apple Inc, General Motors, Marvell Technology Group, CIGNA, Aetna, Computer Sciences, Delphi Automotive, NCR Corp., and Virgin Media.[13]

References[edit]

External links[edit]