Greenlight Capital Q1 2013 Letter: Yen Winner, Ballmer Loser

Greenlight Capital Q1 2013 Letter: Yen Winner, Ballmer Loser

Greenlight Capital Q1 2013 letter to shareholders is out. Earlier today, Sam Forgione of Reuters had a short summary on the Greenlight Capital Q1 2013 letter. Greenlight Capital is up 5.8 percent net for Q1. Returns in April were hurt by losses in gold. Below we have the full hedge fund letter (see Greenlight Capital Q42012 here). Some notable comments from the letter include CEO David Einhorn’s (more subtle) attack on Ben Bernanke and other Central Bankers’ policies. Greenlight is profiting off of Japanese Central Bank actions with their yen short position. The letter discusses the large holding in Apple Inc. (NASDAQ:AAPL), and the hedge fund’s bullishness on the tech giant. David Einhorn jokes that the media over-reacted to recent news from Apple and made the company sound as if they had hired Microsoft CEO Steve Ballmer, whom Einhorn has critiqued in the past.

Einhorn notes that he still believes  Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) is a good short (the May 8th letter quotes GMCR’s closing price before the 23 percent gain today). Einhorn closed other shorts and longs including, ESV, AVB, MBIA, and XRX. One new position is Greenlight’s purchase of  Evonik. Einhorn discusses his purchase of Oil States International, Inc. (NYSE:OIS), which he publicly disclosed yesterday at the Ira Sohn Conference. Recently, JANA Partners purchased a 9.1 percent stake in the company. Greenlight has promoted Alexandra Jenkins to partner who Einhorn credits with being the mastermind behind the fund’s Herbalife Ltd. (NYSE:HLF), Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) and The St. Joe Company (NYSE:JOE) shorts. The hedge fund also notes plans to expand the office. The full Greenlight Capital Q1 2013 letter can be found below:

Greenlight Capital Q1 2013 Letter

May 8, 2013

Dear Partner:

The Greenlight Capital funds (the “Partnerships”) returned 5.8%, net of fees and expenses, in the first quarter of 2013.

It was a quarter of reversal: Marvell Technology Group (MRVL), our biggest loser in 2012, was our biggest winner this quarter. Yen puts, our biggest losing position in both 2010 and 2011, were our next biggest winner. On the other hand, Apple (AAPL), a top three winner in 2011 and 2012, was our biggest loser.

Overall, it was a decent start to the year with a good risk-adjusted return. It’s unlikely for us to keep up with the sort of one-way market that we saw in the first quarter, where the S&P 500 never suffered more than a trivial weekly decline. Our long portfolio roughly matched the S&P 500, we had a modest loss in our short portfolio, and macro was positive.

We are four years into an economic recovery. Corporate earnings, which grew steadily during the initial stages of the recovery, are now growing anemically. The market advance can be better explained by investors convincing themselves that extraordinarily accommodative monetary policy is bullish for stocks. Unconventional monetary policy is now a global phenomenon.

Greenlight Capital Q1 2013 Letter: Yen Short

The Japanese government replaced its conservative central banker with a more aggressive one. This regime change has led Japan into the global battle to see who can debase their currency the fastest and this drove our gains in Yen puts, as the Yen weakened from ¥86.74 to ¥94.19 against the dollar.

Greenlight Capital Q1 2013 Letter: Central Banks

Now every major central bank is fully engaged in aggressive, unconventional policy. It seems

Get our newsletter and our in-depth investor case studies all for free!