Long-Term Returns of David Einhorn’s 5 Activist Targets

3. SunEdison

Activist Investment: 2014
Long Term Returns: -90%
S&P 500 Average Gain: 24%

SunEdison is one of the leading solar power companies. The company develops and sells silicon wafers and photovoltaic energy solutions. It operates through two business segments: Semiconductor Material and Solar Energy. It was one of Einhorn’s activist targets in 2014 as he praised its business model of developing and selling solar projects to yields.

Nevertheless, the activist investor believed the company was highly undervalued and needed to unlock its full growth potential. Therefore, he pushed for the company to sell projects to yields at the attractive process and reinvest the proceeds on new projects.

The company would come under pressure in 2015, imploding by nearly 90%. The implosion came after it announced a deal to acquire a residential solar company while it was in a poor cash position.

Greenlight Management pushed for a seat on the board and the ability to buy stock in the company more efficiently. The activist investor was also looking to sell some of the company’s assets or the entire company as one of the ways of unlocking value.

The company would bow to pressure and offered Einhorn board seats as he had amassed a 6.8% stake in the company. The company filed for bankruptcy protection in 2016 after an aggressive binge of debt-dueled acquisitions proved unsustainable.