Last two years have been a crazy bull market, yet some funds are losing money.
David Einhorn: Value investing isn’t dead, it’s just out of favor
Greenlight Capital fell 1.6% in the fourth quarter, bringing the fund’s year-to-date returns to 1.6%. Meanwhile, the S&P 500 (^GSPC) gained 6.6% in the fourth quarter, ending the year up 21.8%.
1.6%? A hedge fund? Does that mean meguro (38.5%), wuqijun (38.7%) and manch (3x) qualify to start a hedge fund?
The fund’s biggest losers in 2017 included its so-called “bubble basket,” which consists of short bets against high-flying momentum stocks including Amazon (AMZN), Netflix (NFLX), Tesla (TSLA), and athenahealth (ATHN).
Huh? Short those stocks?
“Given the performance of certain stocks, we wonder if the market has adopted an alternative paradigm for calculating equity value,” Einhorn wrote in a letter to investors dated October 24. “What if equity value has nothing to do with current or future profits and instead is derived from a company’s ability to be disruptive, to provide social change, or to advance new beneficial technologies, even when doing so results in current and future economic loss?”
Is he right or merely rationalizing his failure?