Greenlight Capital
Greenlight Capital is a hedge fund founded by David Einhorn. Greenlight invests primarily in publicly traded North American corporate debt offerings and equities.[1] Greenlight is most notable for its short selling of Lehman stock prior to Lehman Brothers' collapse in 2008.[2]
Founded in 1996 with $900,000 (half borrowed from Einhorn's parents), Greenlight has generated greater than a twenty-five percent annualized net return for its investors.[2] 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.[2] 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.[1] Unlike other funds, Greenlight does not use borrowed money, or leverage. The firm does not generate large trading volumes.[2] 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.[2]
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.[2]
In the third quarter of 2008, Greenlight lost 15% of its value,[3] primarily from long positions on industrial companies like Helix Energy Solutions,[3][4] as the SEC temporarily banning short selling of financial stocks.[5][6] 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.[7] Greenlight ended 2008 down 23%, its first annual loss.[8] In 2009 Greenlight recouped its losses from 2008.[9]
Einhorn and Greenlight Capital were fined by the FSA for insider trading on the 25 January 2012. [10]
[edit] References
- ^ a b http://www.hoovers.com/greenlight-capital/--ID__101059--/free-co-profile.xhtml
- ^ a b c d e f http://nymag.com/news/businessfinance/47844/
- ^ a b "Hedge Funds Concede Errors, Profess Optimism After Worst Losses". Bloomberg. 14 October 2008. http://www.bloomberg.com/apps/news?pid=20601213&sid=as2T8YAR9lK0&refer=home.
- ^ http://online.barrons.com/article/SB122160420633245191.html?mod=googlenews_barrons
- ^ http://www.sec.gov/news/press/2008/2008-211.htm
- ^ . http://www.forbes.com/business/2008/10/03/hedge-funds-tpg-greenlight-biz-wall-cz_ar_1003apologies.html.[dead link]
- ^ Boyd, Roddy (3 October 2008). "Market chaos batters hedge-fund star". CNN. http://money.cnn.com/2008/10/03/news/companies/boyd_greenlight.fortune/. Retrieved 4 May 2010.
- ^ "Greenlight Hedge Fund Lost 23% in 2008 on Helix, VW (Update1)". Bloomberg. 23 January 2009. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a49bBnMbjwA4.
- ^ Opalesque (30 October 2009). "Greenlight recoups losses from 2008". http://www.opalesque.com/fullarticle/55519/david%20einhorn/Performance_Top_Asia_hedge_funds_keep_up710.html.
- ^ "Einhorn, Greenlight fined for market abuse". Reuters. 25 January 2012. http://uk.reuters.com/article/2012/01/25/uk-financials-einhorn-fine-idUKTRE80O1R020120125.
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