David Einhorn‘s Greenlight Capital had a disastrous 2015 as the fund posted losses to the tune of 20%. This marked the second losing year in the firm’s almost 20-year history. While some of the money manager’s picks like Sunedison Inc (NYSE:SUNE) continued to spiral downward, many others helped to push Greenlight’s return needle in the right direction during the first quarter. After taking a weighted average return of the fund’s 13F holdings in companies worth over $1.0 billion, we found out that 40 positions saw a gain of 3.9% in the first three months of this year. Hence, we have decided to take a closer look at some of the stocks that had the biggest impact on Greenlight’s returns in the first quarter.
Our research determined that following the small-cap stocks, that hedge funds are collectively bullish on, can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).
#5 Sunedison Inc (NYSE:SUNE)
– Shares Owned by Greenlight Capital (as of December 31): 18.61 Million
– Value of Holding (as of December 31): $94.7 Million
As of mid-March the short interest in Sunedison Inc (NYSE:SUNE) stood at about 45% of the company’s float. The stock price of the debt ridden, ill-managed $137 million developer of photovoltaic energy solutions fell by more than 91% during the first quarter as the company continues to fight bankruptcy. In case of a bankruptcy, the yielcos that the solar giant created, namely TerraForm Power and TerraForm Global might also have to face the music, according to restructuring experts, although they will most likely avoid bankruptcy. David Gallo’s Vallinor Management was hoping for a rebound when it raised its Sunedison Inc (NYSE:SUNE) holding by 43% to 22.24 million shares during the fourth quarter of 2015.
Follow Sunedison Inc. (NYSE:NONE)
Follow Sunedison Inc. (NYSE:NONE)
#4 Macy’s, Inc. (NYSE:M)
– Shares Owned by Greenlight Capital (as of December 31): 18.61 Million
– Value of Holding (as of December 31): $94.7 Million
On the plus side is the 23% hike in Macy’s, Inc. (NYSE:M)’s share price registered during the first three months of this year, after slumping by about 47% last year. Greenlight initiated a position in the company during the last quarter of 2015. Although the $12.5 billion omnichannel retailer managed to beat both the top and bottom line estimates in its financial results for the fourth quarter, it expects the total sales for fiscal year 2016 to fall by 2%. However, the company is receiving a significant interest pertaining to the real estate deals that it is seeking to make. In this regard the company also appointed William Lenehan CEO of Four Corners Property Trust to its board. The move is likely to be orchestrated by activist investor Jeffrey Smith‘s Starboard Value that holds about 3.31 million shares of Macy’s, Inc. (NYSE:M), and which employed a similar strategy for Darden Restaurants, pressuring it to spin off its real estate into the Four Corners Property Trust REIT.
