Greenlight Capital RE (NASDAQ:GLRE) held it’s meeting for investors yesterday May 21. Those attending the conference heard the housing market was rebounding and got a look at the firm’s recent performance and future plans.
The main thrust of the presentation at the meeting is that Greenlight needs the market to improve in order to take advantage of its potential. According to the firm’s executives the company is ready to take advantage of growth when it happens.
Low interest rates, economic uncertainty and aging, and increasingly unhealthy, population in the United States are all pointed to as caps on the firm’s ability to perform to potential. The first two of those can change, though low interest rates look like they’ll stay around for some time and Europe is giving rise to less certainty in macroeconomic outlook with each passing day. Obesity and time are enemies Greenlight is unlikely to defeat.
The company is not simply lying down and waiting for the economy as a whole to improve. The low interest rates are offered as explanation for the low returns in investments. That has put more pressure on the insurance half of the company. That sector is looking to grow.
Going forward the company is looking to take advantage of the commercial motor liability insurance, homeowners in Florida and employee stop loss cover. The firm is also operating in the complicated catastrophe retrocession market. The insurance half of Greenlight Capital is a solid business in itself, however, investment is where the exciting stuff is.
Greenlight’s portfolio is, according to the company, 96% long and 57% short. Apparently the company is holding “cash-rich large cap technology companies with strong balance sheets long”. Apple Inc. (NASDAQ:AAPL) is of course being held by the company along with General Motors Company (NYSE:GM) and Seagate Technology plc (NASDAQ:SLX).Macroeconomic troubles also leave the company holding gold long. The firm has managed a 9.6% annualized return since the company was formed.
Greenlight Capital is a young company and is still building foundations in its two bases. The firm will be ready to pounce as soon a the economy rebounds but is going to stay modest until then it would appear. Is the economy recovers, or as soon as it does, Greenlight will be winning on both sides, increasing investment returns and increased sales as demand for insurance increases.
Greenlight Capital RE is a reinsurer operating globally in the casualty and property markets. The company operates out of bases in the Cayman Islands and Ireland. The firm’s stock opened at 24.34 this morning.