David Einhorn’s redemption requests mean that things are as bad as they can ever get for the castellated hedge fund manager and founder of Greenlight.
“Every month this year we have said it couldn’t possibly get any worse for David Einhorn’s Greenlight, and the very next month we are proven wrong” said David Einhorn
“Every month this year we have said it couldn’t possibly get any worse for David Einhorn’s Greenlight, and the very next month we are proven wrong”
DAVID EINHORN
But David Einhorn’s redemption requests means the fund manager has hit a new low.
So just why have David Einhorn’s redemption requests been piling up?
When investor pulls the rug from under a fund and requests the return of their capital redemption requests is virtual the endgame for an asset manager because it signifies that investors have lost confidence in the asset managers investment strategy.
“My patience is wearing thin” said Morten Kielland, chairman of investment-management firm Key Family Partners SARL and an early Greenlight investor, who said he has withdrawn much of his firm’s money from the fund.
“This is unbelievable”
“My patience is wearing thin”
MORTEN KIELLAND – chairman, Key Family Partners SARL
David Einhorn’s redemption requests have been piling up on a backdrop of the fund’s dismal performance.
In June, Einhorn’s Greenlight tumbled 7.7% bringing the YTD loss to -18.7% after an 11.3% drop in 2017, an unprecedented collapse for the fund whose longs have slumped, but whose “short basket” has bleed dry amid a recent record short squeeze.
It is a tough game and investors patience evaporates very quickly when they see red on their statements.
Chart of the most shorted stocks
David Einhorn’s redemption requests come as the fund has performed below par. Several fail bets include shorting Amazon, Tesla, and Netflix. “Our view is that just because AMZN can disrupt somebody else’s profit stream, it doesn’t mean that AMZN earns that profit stream. For the moment, the market doesn’t agree. Perhaps, simply being disruptive is enough.
“If your money manager says he doesn’t have a clue
then head (quietly) for the exit”
But for those investors who regularly read world top investors David Einhorn’s redemption requests should not come as a surprise.
In one of our earlier articles entitled, David Einhorn sees challenging conditions for value investing
we wrote…
“when David Einhorn was asked where do you think the next disruptive technologies will come from he doesn’t have a clue. Not impressed! David Einhorn challenging conditions for value investing could continue going forward with a growth stock, particular companies in blockchain technology, biotech, and AI and robotics all outperforming value stocks. Could another sub-par performance for David Einhorn’s fund lie ahead?”
Six months later David Einhorn’s redemption requests have piled up.
So what is the takeaway from David Einhorn’s redemption requests?
It’s a money managers job to make it their business to know (or at least have a knowledgeable idea) where the next disruptive technologies will come from.
If your money manager says he doesn’t have a clue then head (quietly) for the exit.
