David Einhorn, the famous hedge fund manager, has just released his second quarter letter. The firm suffered a 3.2% drop in the second quarter, but is up 3.4% for the year. Einhorn criticizes the actions of European Central Bank, and the constant cycle, which he noted in an earlier letter.
Seth Klarman: Investors Can No Longer Rely On Mean Reversion
"For most of the last century," Seth Klarman noted in his second-quarter letter to Baupost's investors, "a reasonable approach to assessing a company's future prospects was to expect mean reversion." He went on to explain that fluctuations in business performance were largely cyclical, and investors could profit from this buying low and selling high. Also Read More
The biggest winner is a short position in Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR), which fell from $46.84 to $21.78 per share.
Einhorn discloses new short positions, but does not give names. He is long CIGNA Corporation (NYSE:CI) and Coventry Health Care, Inc. (NYSE:CVH). Einhorn notes that, ‘the entire sector had been battered in anticipation of Obamacare.’
Einhorn sold out of Best Buy Co., Inc. (NYSE:BBY), noting stiff competition from Amazon.com, Inc. (NASDAQ:AMZN), and questioning whether BBY is a value trap. The full letter is embedded below:
H/T Deal Breaker