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Published on March 5th, 2018 | by James Ayre


Greenlight Capital Continues To Tumble (6% Loss In February), Betting Against Tesla & Amazon Not Helping

March 5th, 2018 by  

We’ve reported a number on times on the outspoken Tesla stock short-seller David Einhorn, the billionaire that manages the hedge fund Greenlight Capital, in the past. This has typically followed from Einhorn publicly making comments about Tesla that are hard to justify — unless one is simply trying to affect stock prices.

The latest news on that front is that Greenlight Capital has now lost 11.9% this year, with 6% of that coming in February, Einhorn recently revealed to the hedge fund’s clients.

During this same period, it should be realized, the “broader Standard & Poor’s 500 stock index has gained 1.5%,” as noted by Reuters in its coverage.

“While we’ve never underperformed like this, our prior worst underperformance compared to the S&P came in March of 2000, which was a similar environment,” Einhorn was recently quoted as saying.

So why is the hedge fund performing so poorly? Regardless of his explanations, the reality is clearly largely tied up to Einhorn’s assertions that Amazon and Tesla stock are highly overvalued — and accompanying large-scale short-selling bets against them.

Reuters provides more: “Einhorn has long bet that certain technology stocks including Amazon and Tesla would fall but his short bets appear not to have helped him even as stocks faltered in February.”

“Investors are especially eager for a scorecard on how hedge funds performed this month after these types of portfolios long marketed themselves as being able to protect capital in tumbling markets even if they lagged when stocks were climbing. Einhorn earlier in February acknowledged that value investors were suffering, yet he laid out hopes for their comeback.”

While such an overall strategy can certainly work — with regard to making money in a faltering market — it’s still the case that the right stocks have to be chosen. Short-selling highly popular and now culturally entrenched brands like Amazon and Tesla doesn’t seem such a sure bet from where I’m standing.

As you may recall, Tesla short-sellers have now already lost $1 billion in 2018… 


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About the Author

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.

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