"Tracking David Einhorn’s Portfolio – Q2 2019 Update"
"David Einhorn's 13F stock portfolio value decreased from $1.41B to $1.36B this quarter.Greenlight decreased General Motors, Valaris plc, Altice USA, Tempur Sealy Intl, and Voya Financial while adding Chemours.The largest three positions are at ~45% of the portfolio. As of Q2 2019, the overall portfolio is 120% long and 74% short.This article is part of a series that provides an ongoing analysis of the changes made to David Einhorn’s Greenlight Capital 13F portfolio on a quarterly basis. It is based on Einhorn’s regulatory  filed on 08/14/2019. Please visit our  series for an idea on his investment philosophy and our  for the fund’s moves during Q1 2019.Greenlight Capital’s 13F portfolio value stood at $1.36B this quarter. It is down ~4% compared to $1.41B as of last quarter. Einhorn’s Q2 2019 letter reported that the fund returned 17.4% for H1 2019. This is compared to 18.5% for the S&P 500 Index. In addition to partner stakes, the fund also invests the float of Greenlight Capital RE (GLRE). Despite the availability of relatively permanent capital from that source, AUM went down from ~$7B to ~$2.5B during 2018 due to huge redemptions. Partly in response, Greenlight reopened the fund to new investors. To learn about David Einhorn and the perils of shorting, check-out his “”.Note: Greenlight maintains a hefty short book. Short stakes currently held include Tesla (TSLA) and Assured Guaranty (AGO). Also, their Q2 2019 letter talked about Chewy (CHWY) without divulging whether they were short – it compared Chewy’s business model to Pets.com which went bankrupt in 2000 following the bursting of the Internet bubble.New Stakes:Chemours (CC) and Dillard’s Inc. (DDS): CC is a large 6.59% of the portfolio position established this quarter at a cost-basis of $23.18. The stock is currently well below that at $12.66. The 1.84% DDS stake was purchased at $59.20 compared to current price of $55.31. For investors attempting to follow, these two are good options to consider for further research.Note 1: On CC, Greenlight believes the new bear thesis based on potentially billions in liabilities is flawed. Also, they see $10 earnings power for 2021. On DDS, although retail has problems, their owned real-estate has tremendous potential – the implied valuation is ~$27 per square foot of owned space. This is compared to $285 per owned square foot average valuation for Nordstorm, Macy’s, Kohls, JC Penney, Simon, and Seritage.Note 2: These two positions are back in the portfolio after a quarter’s gap. Both positions were reestablished in Q4 2018 but disposed last quarter. They have seen previous roundtrips as well. Chemours had a very successful roundtrip (~4x returns) during the two-year period that ended in Q1 2018. Dillard’s was a medium sized position exited in Q2 2018 at a modest profit after three years of ownership.Scientific Games (SGMS), KAR Auctions (KAR), and Cars.com (CARS): These are small (less than ~2% of the portfolio each) new positions purchased during the quarter. The 2.19% SGMS position was purchased at prices between $18 and $24 and the stock currently trades below that at $16.71. KAR is a 1.63% of the portfolio position established at prices between $19.50 and $25 and the stock is now at $25.50. CARS is a minutely small 0.30% stake.Note: On SGMS, Greenlight’s buy thesis is on the belief that after the spinoff of the online social gaming business SciPlay (SCPL), the remaining gaming equipment business (slot machines and instant lottery) trade at a discounted valuation of ~5x cashflow.Stake Disposals:Seadrill Ltd. (SDRL): The very small 0.62% position in SDRL was disposed during the quarter.Stake Increases:Adient plc (ADNT): ADNT is a ~4% portfolio stake that saw a ~300% increase in Q3 2017 at prices between $64 and $86. There was a roughly one-third selling in Q1 2018 at prices between $57.50 and $84. Next quarter saw another ~50% reduction at prices between $47.50 and $66. There was an about turn in Q3 2018: position almost doubled at prices between $38 and $51 and that was followed with a ~75% increase next quarter at prices between $15 and $38. The stock is now at $22.70. This quarter also saw a ~11% stake increase.CNX Resources (CNX): CNX is a ~3% stake purchased in Q3 2014 and built up over the next several quarters. The three quarters thru Q4 2016 had seen a ~50% combined reduction at prices between $8 and $19. The pattern reversed in Q1 2017: ~50% increase at prices between $12 and $16.50. The four quarters thru Q4 2018 had seen a ~80% selling at prices between $11 and $18. Last quarter saw the pattern reverse again: two-thirds increase at prices between $9.75 and $13.50. The stock currently trades at $7.29. There was a marginal further increase this quarter.Note: The prices quoted above are adjusted for the spinoff of Consol Energy (CEIX) in November 2017.Consol Energy (CEIX): CEIX is a small 1.33 % of the portfolio stake purchased in Q4 2018 at prices between $29.50 and $41.50 and increased by ~140% last quarter at prices between $31.50 and $38.50. This quarter saw another stake doubling at prices between $25 and $34.50. The stock currently trades well below those ranges at $17.25.Teekay LNG Partners (TGP): TGP is a very small 0.88% of the portfolio stake established last quarter at prices between $11 and $15.25. This quarter saw a ~70% stake increase at prices between $13 and $15.25. The stock currently trades at $13.49.Stake Decreases:General Motors (GM): GM is Greenlight’s largest position at ~17% of the portfolio. The stake was established during the first three quarters of 2015 at prices between $28.50 and $39. The three quarters thru Q2 2016 had also seen a combined ~22% increase at prices between $27 and $34. The stake was increased by around four-times during Q4 2016 & Q1 2017 at prices between $31 and $38.50. The next three quarters saw a ~65% reduction at prices between $32.50 and $46.50. Last year saw another ~55% selling at prices between $30.50 and $45 and that was followed with a ~24% reduction last quarter at prices between $32 and $40. GM currently goes for $37. This quarter also saw a one-third selling at prices between $33 and $40.Note 1: In March 2017, Greenlight proposed GM shares be split into two classes (one with dividend & the other without) but management rejected the plan. In response, Greenlight nominated three members to the board but GM shareholders rejected the proposal and the nominations in June.Note 2: Greenlight had a previous successful roundtrip with GM: A ~10% stake was disposed in Q1 2014 at an average exit price of $35.76 compared to an average entry price of $23.87.AerCap Holdings N.V. (AER): AER is a large (top three) ~13% position. It was established in Q2 2014 at prices between $39 and $48. Q4 2014 thru Q3 2015 saw a combined ~270% increase at prices between $36.50 and $48.50. First three quarters of 2016 had also seen another ~70% increase at prices between $25.50 and $42. The four quarters thru Q3 2018 saw the stake reduced by ~70% at prices between $49 and $57.50. The stock currently trades at $52.11. There was a ~9% trimming this quarter.Altice USA (ATUS): ATUS is a ~6% portfolio stake established in Q3 2018 at a cost-basis of $18.38 and increased by ~40% in Q4 2018 at prices between $14.50 and $19. There was a ~23% selling this quarter at prices between $22 and $25. The stock is currently at $26.55.Tempur Sealy International (TPX): A very small 0.34% of the portfolio stake in TPX was purchased in Q2 2017. The following quarter saw a whopping 600% increase to a fairly large position at a cost-basis of $56.11. Q4 2017 saw a ~30% selling at prices between $51 and $68 and that was followed with a ~70% reduction next quarter at prices between $44 and $64.50. Q4 2018 saw the pattern reverse: ~70% increase at prices between $39 and $54. Last quarter saw a ~50% selling at prices between $41 and $60. That was followed with a ~28% reduction this quarter at prices between $57.50 and $75. The stock is now at $74.67 and the stake at 2.56% of the portfolio.Hilton Grand Vacations (HGV) and Echostar (SATS): HGV is a ~2% of the portfolio stake established in Q4 2018 at prices between $24.50 and $33 and the stock currently trades at $27.62. There was a ~22% selling this quarter at prices between $25 and $33.50. The ~2% SATS position was purchased in Q4 2018 at prices between $34 and $46 and it is now at $38.70. This quarter saw marginal trimming.Voya Financial (VOYA) previously ING US: The 1.29% VOYA position was established in Q2 2013 at a cost-basis of $20.29. 2017 saw a ~60% combined increase at prices between $24 and $41. Last year had seen a ~80% selling at prices between $37 and $55 and that was followed with another ~30% reduction last quarter at prices between $39.50 and $51.50. This quarter saw a ~60% further selling at prices between $51 and $56. The stock currently trades at $49.22. Greenlight is harvesting gains.Medicines Company (MDCO): The ~2% MDCO stake saw a ~23% selling during the quarter at prices between $27.50 and $37.50. The stock currently trades at $32.71.Valaris plc (VAL) previously Ensco Rowan plc (ESV): VAL was a fairly large 4.22% portfolio position as of last quarter. It was established in Q4 2017 at a cost-basis of $22.88. There was a stake doubling in Q1 2018 at prices between $17.36 and $29.72. Last quarter saw a reversal: ~25% selling at prices between $14 and $19. The position was reduced to a very small 0.86% portfolio stake this quarter at prices between $6.50 and $17.25. The stock is now at $4.29.Note: The prices quoted are adjusted for the 1-for-4 reverse stock split following the merger with Rowan that closed in April.Kept Steady:Green Brick Partners (GRBK): The large (top three) ~15% of the 13F portfolio GRBK stake was acquired as a result of BioFuel Energy’s JGBL Builder Finance acquisition and rename transaction. The deal closed (October 2014) with Greenlight owning 49% of the business. David Einhorn was appointed Chairman of the Board following the transaction.Brighthouse Financial (BHF): BHF is a large (top five) stake at ~9% of the portfolio. The position was established in Q3 2017 and increased by ~60% in the following quarter at an overall cost-basis of $57.92. The stock is currently well below that at $35.24. There was a ~70% selling in Q4 2018 at prices between $29 and $46.50.Note 1: Greenlight’s Q2 2019 letter highlights flaws in the negative research reports published by Goldman Sachs (GS) and Credit-Suisse (CS): a) the main annuity business is valued as though it is in run-off mode, b) interest-rate sensitivity is over-estimated, and c) cash-flows are currently low because of BHF’s younger book of business. As such, they should get a higher multiple. But the research reports do the exact opposite – lower current cashflows are given a lower multiple.Note 2: BHF is a spinoff of MetLife’s (MET) U.S. Retail business (annuities and life insurance) that started trading in July 2017.Consol Coal Resources LP (CCR): CCR is a top five 6.75% portfolio stake. Greenlight controls ~35% of CCR. The stake came about as a result of Consol’s coal spinoff in 2015. The stock started trading at ~$15 and currently goes for $13.26.Exela Technologies (XELA): In July 2017, Quinpario Acquisition (a SPAC that had an IPO in January 2015) merged with HOV LLC and Novitex Holdings (financial technology services provider) to form Exela Technologies. Greenlight has a 5.5% ownership stake in Exela. The stock started trading at ~$10 and currently goes for $1.12. The 1.30% portfolio stake saw a ~4% trimming last quarter.Note: A regulatory filing since the quarter ended show them owning 1.54M shares (9% of business) of Neubase Therapeutics (NBSE).The spreadsheet below highlights changes to Greenlight’s 13F stock holdings in Q2 2019:Regulatory Filings thru 5/17/2019 – None.– 4/12/2019 – Performance – Q1 2019 up11% compared to up 13.6% for S&P. Lost money on shorts – AGO, bubble basket, Netflix puts. BHF – thinks the accounting is hard for investors to follow and that is the reason for lackluster performance – expects it to earn around $9 per share in 2019 – at $36.29, trades at 4x 2019 adjusted earnings and 30% of year-end book value, TSLA – large section on the short position – thinks they are on the brink of failing and that it has happened and was acknowledged several times previously after Musk rescues. Bayer – exited with a small gain over 2.5 years – failed investment at multiple levels. Exposure: 112% long and 70% short. Largest Positions – AerCap, Brighthouse Finl, Consol Coal Resources, General Motors, and Green Brick Partners. Gold & other macro bets are not included in the largest positions list. They have the same amount of gold as in Q4 2018.Info from  – CFO Harry Brandler is leaving after 17 years of service. Top sells: Bayer (OTCPK:BAYRY +0.2%), Mylan (MYL -2.2%), Perrigo (PRGO-1%), Apple (AAPL -0.9%). Covered his short position in Core Labs (CLB -3%). Top long positions: Brighthouse Financial (BHF -2.4%), CONSOL Coal Resources (CCR -0.5%), General Motors (GM -1.7%), Green Brick Partners (GRBK -0.9%), Germany's Deutsche Pfandbriefbank (PBBG.DE), gold and Puerto Rico general obligation bonds. Top short positions: Assured Guaranty (AGO -0.1%) and Tesla (TSLA-3.7%)"