Reuters
- Greenlight Capital posted first quarter returns of 11%, according to an investor letter seen by Business Insider.
- The letter cites five long positions and three shorts, including one on Tesla, that are driving returns so far this year.
- Last year, Greenlight lost 34% due to its Tesla short and positions in General Motors and Brighthouse Financial.
After a devastating 2018, David Einhorn’s Greenlight Capital posted first quarter returns of 11%, according to an investor letter seen by Business Insider.
The letter highlights eight positions — five long positions and three shorts — that are driving the fund’s performance this year, including a short on Tesla.
Safety concerns about Tesla cars, in which "the wheels are falling off — literally," according to the letter, is only part of the reason the company "appears to again be on the brink."
"The signs are everywhere, from the lack of demand, desperate price cutting, layoffs, closing-and-then-not-closing stores, closing service centers, cutting capex, rushed product announcements and a new effort to distract investors from the demand problem with hyperbole over TSLA’s autonomous driving capabilities," the letter states.
"TSLA has lost a significant number of senior executives and appears to be having a hard time recruiting replacements. After all, who would want to work in such an environment?"
Greenlight declined to comment beyond the letter. Tesla did not immediately respond to requests for comment.
The letter goes on to state that Tesla CEO Elon Musk "never admits crisis in real time," and has promised previously that the company would be profitable without delivering. Einhorn, in a presentation last year to partners, called Tesla a cult.
The letter also cites its long positions in companies like General Motors and Brighthouse Financial as a reason for the early success this year — two companies that attributed to a hellacious 2018 for the fund, when it lost 34%.
The firm has also recruited a new CFO, Barrett Brown, who was previously the CFO at Viking Global Investors and a a partner at PriceWaterhouseCoopers, the letter states.
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Greenlight ends the letter with a quote from Kermit the Frog that appears to be a shot at Musk and Tesla: "Rainbows are visions, but only illusions, and rainbows have nothing to hide."
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Source: Business Insider – bsaacks@businessinsider.com (Bradley Saacks)