Yesterday David Einhorn was on BloombergTV for a rare interview, and he mentioned some of his positions, including Vodafone Group Plc (NASDAQ:VOD) (LON:VOD) and Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR). We have talked about Einhorn’s bearish bet in Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) and how it is one of the worst performing shorts of this year by famous shortsellers. Like every seasoned market bear, Einhorn is unfazed by the 85 percent share price appreciation that GMCR has taken in this year.
Einhorn’s September returns
Einhorn reported a 0.5 percent gain in September and the fund was up by 4.7 percent in last quarter. Most of Greenlight’s top positions recorded gains in Q3, however, while his performance was good, it was not as great as his long portfolio did alone. Greenlight Capital has a 71 percent gross exposure in its short book, which is a lot for the event driven long/short equity strategy that the hedge fund follows. A logical guess is that the short book is not doing so well, which is not surprising as nobody is doing so well in that area. HFRX Short Bias Index is down 7.6 percent for the eight months of this year.
Greenlight losing in Daily Mail short
A less publicized short of Greenlight Capital is in London’s Daily Mail and General Trust plc (LON:DMGT); the fund is holding 4.55 percent of Daily Mail’s shares short. Greenlight recently increased the position slightly, which is now worth $205 million. The position is not the biggest in absolute value but it amounts to a significant portion of the company’s total float, so in that sense it is a big short. Einhorn has been unsuccessful so far with this short as well, and shares of the company are up over 50 percent since the position was made public in Nov 2012.
The British media conglomerate released a preview of its earnings for FY2013 ending on September 30, which was in line with expectations and prior guidance. Overall, group revenues were down 8 percent, but up 2 percent organically. The preview of earnings further reported that B2B operations were up 6 percent for the year, whereas DMG Media was down -2 percent, and EPS for the year came in at 52.1 pence. For now, shares of DMGT are trading at 10.3x/9.9x 2013E/14E EV/EBITDA.
Daily Mail & General Trust reported surging advertising revenues for one of its websites, MailOnline. The website reported a 45 percent increase in advertising revenue, and monthly unique viewers stood at a record 138 million, up 30 percent from last year. However, overall, advertising revenue was only up 1 percent for the group.
According to thescreener.com, DMGT’s valuation is less attractive than its European peers, and the company trades below its fair price estimation. They further note that since the end of September, analysts have been slightly lowering their estimates for the company’s future growth. JPMorgan Cazenove and UBS have a Neutral rating on the stock, whereas Deutsche Bank rates it as Sell.
Losses in shorts across Europe in Q3
Other shorts in the European region include a negative position in a Finnish company, Outotec Oyj (HEL:OTE1V), which has major exposure to the mining and steel industry. Outotec is a concentrated short in Finland, where 11 percent of the outstanding shares are held in short bets which includes famous names like, Maverick Capital and Millennium Capital. Shares of Outotec gained 10 percent in the July-September period.
Einhorn’s Greenlight was doing well in shorting Swedish medical technology company Elekta publ AB (STO:EKTA-B), until the second quarter of this year. However, shares of the company rose in July-August and the gains from this short flattened out; Elekta was up 1.3 percent in Q3. Greenlight has a 2.26 percent short bet in Elekta publ AB (STO:EKTA-B), which amounts to a $140 million position.
FLSmidth & Co. A/S (CPH:FLS)’s shares rose 14 percent in Q3. The Denmark-based company, which provides services to the cement and mineral industry, is also a short bet of Greenlight Capital. The fund has a 2.6 percent short in FLSmidth, which is worth $70 million.