David Einhorn’s Greenlight Capital Buys Twitter Stake, Says Shares Undervalued vs Facebook (CNBC)
David Einhorn‘s Greenlight Capital bought Twitter shares, according to an investor letter sent to clients on Tuesday. “We initiated a small position in Twitter at an average [price] of $21.59,” the letter said. “Despite a massive user base and broad reach, Twitter has an enterprise value of about 2% of Facebook, the largest social media platform.” The investor also said the fund started long positions in Brighthouse Financial, Ensco and Time Warner. Einhorn explained Time Warner will likely get acquired by AT&T, but the company’s stock will do well even if the deal doesn’t happen.
Hess Cutting Hundreds of Workers as it Battles Activist Investor (Reuters)
Hess Corp (HES.N) is cutting roughly 13 percent of its workforce and streamlining operations as it battles an activist hedge fund shareholder pushing for the U.S. oil and gas producer to post its first quarterly profit since 2014. Most of the cuts, which could start as early as Tuesday and continue through the week, are in Houston, home to a majority of the company’s employees, according to two sources familiar with the matter. Lorrie Hecker, a Hess spokeswoman, confirmed the cuts, saying about 300 workers, or about 13 percent of the company’s workforce, would be dismissed. The cuts also include an unknown number of contractors, who are not full-time employees. Hedge fund Elliott Management Corp last month launched an activist campaign against Hess, saying it was frustrated by the company’s “continuing underperformance” and floated the idea of pushing to remove John Hess as chief executive.
Fund Managers Remain Upbeat Amid Soaring Market (Barron’s)
There’s plenty of talk that the U.S. stock market – which saw the Dow Jones industrial average Tuesday breach 26,000 for the first time – is a bubble about to pop, but fund managers remain optimistic. In fact, they think a market top won’t arrive for at least another year, CNBC.com reports, citing the latest Bank of America Merrill Lynch Fund Manager Survey. The consensus is that the market won’t hit a peak until sometime in 2019. Fund managers have trimmed their cash allocations to the lowest level in five years and are at a two-year high in allocation to stocks, the survey reveals. Meanwhile, hedge fund managers say their equity exposure, which is 49% net long, is at its highest since 2006.
Greenlight’s Einhorn Bets on Brighthouse, Makes Money on GM (Reuters)
BOSTON (Reuters) – Hedge fund manager David Einhorn told investors on Tuesday that he made a “large” bet on insurer Brighthouse Financial late last year, and had made money on General Motors but lost by shorting Amazon and Tesla. Einhorn’s Greenlight Capital bought into Brighthouse, MetLife’s former U.S. retail life-insurance business, at an average cost of $57.92, according to a letter sent to clients and seen by Reuters. The stock is now trading at $63.90. The fund manager said General Motors, which was his firm’s biggest winner last year, remains “significantly under valued” given the automaker’s “impressive fundamental performance.”