Greenlight Capital 2017 Q4 Investor Letter

Greenlight Capital, a hedge fund founded by David Einhorn in 1996, recently released its Q4 investor letter – you can download a copy below.

The hedge fund returned (1.6%), net of fees and expenses, in the fourth quarter of 2017, bringing the year-to-date net return to 1.6%. In a comparison, the S&P 500 index returned 6.6% during the fourth quarter, bringing its year-to-date return to 21.8%.

According to Greenlight Capital, 2017 was a challenging year for the fund.

Despite it being a good year in the market, it was a challenging environment for our investment style. We do not mimic any index and we can think “outside the box.” We have a value orientation and we take comfort from the margin of safety afforded by the low valuations of our long investments. Though most people understood our last quarterly letter as tongue-in-cheek and while we certainly don’t believe value investing is dead, it is clearly out of favor at the moment. Last year the Russell 1000 Pure Growth Index outperformed the Russell 1000 Pure Value Index 38% to 4%. While it feels like we have been running face first into the wind, we don’t intend to capitulate and are sticking to our strategy of being long misunderstood value and shorting “not value.”

The biggest losers for the year were the fund’s short positions on the “bubble basket” and Caterpillar, while General Motors was its biggest winner.

You can download a copy of Greenlight Capital’s Q4 investor letter here.