"Tracking David Einhorn’s Portfolio – Q1 2020 Update"
"David Einhorn's 13F stock portfolio value decreased from $1.35B to $702M this quarter.Greenlight added Change Healthcare and increased CNX Resources while dropping General Motors.The largest three positions are at ~51% of the portfolio. As of Q1 2020, the overall portfolio is 96% long and 69% short compared to 127% long and 63% short as of EOY 2019.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 05/15/2020. Please visit our  series for an idea on his investment philosophy and our  for the fund’s moves during Q4 2019.Greenlight Capital’s 13F portfolio value stood at $702M this quarter. It is down ~48% compared to $1.35B as of last quarter. Einhorn’s Q1 2020 letter reported that the fund returned negative 21.5% for Q1 2020. This is compared to negative 19.6% for the S&P 500 Index. In addition to partner stakes, the fund also invests the float of Greenlight Capital RE (GLRE). 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 Netflix (NFLX). Their Q1 2020 letter talked about closing short positions in Celltrion and Dexcom (DXCM) along with most of their “bubble-basket” shorts (the puts expired in January).New Stakes:Change Healthcare (CHNG): CHNG is large (top five) 7.53% of the portfolio position purchased at a cost-basis of $11.40. The stock currently trades at $12.32. The thesis is on the idea that 9x estimated FCF valuation is compelling for a company that can be termed “backbone of healthcare internet”. Also, they are poised to grow in the coming years.Crown Holdings (CCK), Centene Corp (CNC), Altria Group (MO), Paychex Inc. (PAYX), American Express (AXP), Goldman Sachs (GS), Danaher Corp (DHR), Berkshire Hathaway (BRK.B), Walt Disney (DIS), Tesla (TSLA) Puts, and Gulfport Energy (GPOR): These are small (less than ~2% of the portfolio each) new positions established this quarter.Stake Disposals:General Motors (GM): GM was Greenlight’s second-largest position at ~17% of the portfolio as of last quarter. The entire position was disposed this quarter at prices between $16.80 and $37.40. The stake was established during the first three quarters of 2015 at prices between $28.50 and $39. The position 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. 2018 saw another ~55% selling at prices between $30.50 and $45 and that was followed with a ~50% reduction in H1 2019 at prices between $32 and $40. The stock is now at ~$26.Note 1: The position had a ~9% IRR over a holding period of roughly five years. 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.Note 2: 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.Echostar (SATS): The 2.18% SATS position was purchased in Q4 2018 at prices between $34 and $46 and sold this quarter at prices between ~$27 and ~$43. It is now at ~$30. Overall, the position had a small gain.DXC Technology (DXC): DXC was a medium-sized 2.27% of the portfolio stake established last quarter at a cost-basis of $36.54 and disposed this quarter. The stock currently trades at $15.48. Overall, the position resulted in a small loss.Scientific Games (SGMS): The 2.24% SGMS position was purchased in Q2 2019 at prices between $18 and $24 and the stock currently trades at $14.30. Last quarter saw a ~25% selling at prices between $19.50 and $31.75 and the disposal this quarter was at prices between ~$4 and ~$30. Overall, the position resulted in a small loss over a short holding period.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. Last four quarters saw a ~80% selling at prices between $42 and $89. The elimination this quarter was at prices between $24 and $96. The stock is now at $60.28. Greenlight realized gains.Medicines Company (MDCO): The ~2% MDCO stake saw a ~23% selling in Q2 2019 at prices between $27.50 and $37.50. Last quarter saw another ~70% reduction at prices between $49 and $85. Last November, Novartis (NVS) agreed to acquire MDCO for $85 per share cash and that transaction closed in January.Consol Energy (CEIX): CEIX was a small 0.66% of the portfolio stake purchased in Q4 2018 at prices between $29.50 and $41.50 and increased by ~140% next quarter at prices between $31.50 and $38.50. Q2 2019 saw another stake doubling at prices between $25 and $34.50. The position was disposed this quarter at prices between $3.70 and $14.75. The stock is now at $6.93.Stake Increases:Brighthouse Financial (BHF): BHF is a large (top three) stake at 12.53% 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 $28.85. There was a ~70% selling in Q4 2018 at prices between $29 and $46.50. This quarter saw a marginal increase.Note 1: Greenlight commented on this position on their Q1 2020 letter: The valuation is very cheap and there is a large buyback in place that should allow them to retire ~25% of the shares this year.Note 2: BHF is a spinoff of MetLife’s (MET) U.S. Retail business (annuities and life insurance) that started trading in July 2017.AerCap Holdings N.V. (AER): AER is a large (top three) ~11% 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 $28.80. Last two quarters had also seen a ~20% selling. This quarter saw a minor increase.Note: Greenlight’s bullish thesis pivots on the fact that they have plenty of near-term liquidity and ~70% of their planes are unencumbered. Given the policy response from most governments, most airlines should avoid bankruptcy and honor lease obligations.CNX Resources (CNX): CNX is a large 5.6% 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. Q1 2019 saw the pattern reverse again: two-thirds increase at prices between $9.75 and $13.50. This quarter saw another ~25% stake increase at prices between $5 and $9. The stock currently trades at $10.38.Note: The prices quoted above are adjusted for the spinoff of Consol Energy (CEIX) in November 2017.Stake Decreases:Chemours (CC): CC is a large ~6% of the portfolio position established in Q2 2019 at a cost-basis of $23.18. Last quarter saw a ~75% stake increase at prices between $12 and $23. The stock is currently at $12.45. There was a ~30% selling this quarter at prices between $7.50 and $20.Note 1: The main businesses of Chemours are Titanium Dioxide and Refrigerants both of which are under pressure. Despite that, as of last September, Greenlight believed CC had $8.50 earnings power for 2021. This is compared to Wall Street estimates of $3.20 and $3.99 for 2020 and 2021 respectively. Also, Greenlight believes the PFOA liability concerns are overrated - PFOS liability is more of a risk factor and Chemours has minimal exposure there.Note 2: Greenlight had a very successful (4x returns) previous roundtrip with Chemours in the two-year period that ended in Q1 2018.Altice USA (ATUS): ATUS is a ~5% 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 in Q2 2019 at prices between $22 and $25. That was followed with a one-third reduction last quarter at prices between $25 and $31.50. This quarter also saw a ~25% selling at prices between $17.20 and $29.50. The stock is currently at ~$24.Adient plc (ADNT): ADNT is a 2.40% 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. Q2 & Q3 2019 had also seen a 27% stake increase at prices between $14.50 and $26. The pattern reversed again this quarter: ~25% selling at prices between $6.50 and $28.50. The stock is now at $16.84.Teekay LNG Partners (TGP): TGP is a very small 0.81% of the portfolio stake established in Q1 2019 at prices between $11 and $15.25. Next quarter saw a ~70% stake increase at prices between $13 and $15.25. The stock currently trades at $11.75. There was a roughly one-third reduction this quarter at prices between $7.50 and $15.50.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 5.3% ownership stake in Exela. The stock started trading at ~$10 and currently goes for $0.35. The 0.22% portfolio stake saw a ~7% trimming this quarter.Kept Steady:Green Brick Partners (GRBK): GRBK is currently the largest position at ~28% of the 13F portfolio. The 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.Note:  Greenlight’s recent letters have discussed this position: The stock trades at a cheap valuation. They expect single-family housing to emerge as a post-pandemic secular winner. Revenue has tripled since 2014 and the business (diversified homebuilding and land development) has industry-leading margins and low Debt/Capital.Consol Coal Resources LP (CCR): CCR is a 4.46% portfolio stake. Greenlight controls ~35% of CCR. The position came about as a result of Consol’s coal spinoff in 2015. The stock started trading at ~$15 and currently goes for $4.21.Neubase Therapeutics (NBSE): NBSE is a small 1.56 % of the portfolio position established in Q3 2019 at prices between $3.15 and $6.60 and the stock currently trades at $8.28. Greenlight controls ~9% of NBSE.The spreadsheet below highlights changes to Greenlight’s 13F stock holdings in Q1 2020:Info from  – 1/2020 – Performance – 13.8% in 2019 vs 31.5% for S&P. 12.7% annualized since 1996 inception, Commentary – 96% of capital in top-10 longs and 47% in top-10 shorts, AER – 86% of BV, 55% return in 2019, as technical overhangs reduce, should continue outperformance. AGO Short – believes accounting is suspect, Chicago, Illinois, New Jersey can be problematic along with Peurto Rico – Greenlight hedged using Peurto Rico bonds in 2019 and that was cashed at a profit offsetting some of the 30% advance in AGO in 2019. Altice Europe – appreciated 238% in 2019 as bankruptcy risk abated – purchased it as a leveraged stub – estimates 6x EV/EBITDA in 2020 implying substantial upside. BHF -  4 PE for 2020 and 30% of BV – main business is variable annuities which means the business is sensitive to equity market performance – their assurances goes upside down in that environment – but it goes both ways – the strong performance since 2011 has resulted in separate account returns far exceeding making it unlikely that many variable annuity policies are currently upside down – they think the business should trade near BV. CC – 5.7 PE on 2020 estimates, Main businesses are Titanium Dioxide and Refrigerants – both under pressure in 2019. Liability concerns related to PFOA continues to be an overhang – they believe the risk is overrated and they have minimal PFOS risk exposure. Analyst Estimates are $3.20 and $3.99 for 2020 and 2021 which they believe might be too low. Credit Short – on current spreads, the risk/reward for credit is unfavorable and the position provides  a natural hedge for the cyclical or credit-sensitive longs – BHF, CC, and GM. GM – 5.8x PE on 2020 estimates, capital needs that affected cashflow seems largely done. Expects $7 earnings in 2020 against $6.36 consensus. Share buybacks very possible. Wild card upside – GM Cruise autonomous launch, Gold – US running $1T annual deficit with record low unemployment. Deficits don’t matter (can print money) consensus across both aisles. Gold is a good hedge against these aggressive fiscal and monetary policies in good and bad times. GRBK – diversified homebuilding and land development – 9.5 PE on 2020 estimates despite 59% return in 2019. Has tripled revenues since 2014 while having industry-leading margins and low Debt/Capital. NFLX Short – 59PE on 2020 estimates overstates business economics. Increased exposure in late 2019 as the stock spiked. The story that winner-take-call streaming king status is ending – plenty of strong competition now. Emerging markets are growing but implied margins seem very low. Heavy debt load – if they chose to raise equity, then that is an indication that it is game over. NEW POSITIONS: DXC – purchased at $36.54 at 7x implied earnings. Believes the self-inflicted challenges will be addressed by new CEO & Software AG – Entered at Euro 31.05 – 2.3x Revenue valuation is a deep discount to peers – that should improve as business shifts to subscription based recurring model. EXITS: Voya Financial – VOYA – 21.7% annualized return over 6.5 years of ownership – exited as valuation approached BV and they shifted capital to BHF. Dillard’s and Siltronic AG – sold the small stakes after shares appreciated following short holding periods.  LAM Resarch Short – small position covered at a loss. -    Exposure -127% long and 63% short , Largest Long Positions – AER, BHF, GM, Gold, and GRBK.Regulatory filings thru 2/17/2020: 13G/A 2/14 – XELA - ~8M shares – 5.3% of business."