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December 22, 2024
PI Global Investments
Hedge Funds

Greenlight Establishes a New Top-Five Position


The value focused hedge fund manager told clients it established a number of new positions in the fourth quarter, including one that instantly landed among its top-five holdings, according to the fourth quarter letter from his hedge fund firm, Greenlight Capital, and obtained by Institutional Investor.

However, the hedge fund has not publicly identified the company “because we are still buying it,” according to the letter.

Einhorn — who never signs the letters but clearly writes them — did not disclose any other information about the company.

Greenlight disclosed two new medium-sized positions — Alight and Viatris — and one small position in Belgium-listed Syensqo.

As II earlier reported, Greenlight gained 22.1 percent in 2023, despite losing 4.3 percent in the fourth quarter. The firm conceded it was positioned conservatively heading into the fourth quarter when Federal Reserve Chairman Jay Powell announced that he may be preparing to cut interest rates.

Greenlight described Alight as a software-based provider of health and wealth benefits and payroll solutions for large companies. It noted the company recently underwent “a significant cloud-based platform upgrade” and has successfully grown revenues and profits.

“The business is much higher quality than most that meet our disciplined valuation criteria,” Greenlight stressed, noting that customer retention is roughly 98 percent and margins “are healthy.”

“We believe that the efficiency of this new platform will enable further cost cutting, leading to improved cash flows that can be used to pay down debt and repurchase shares,” Greenlight added. The firm said it paid an average price of $7.98 per share.

Viatris is a generic drug maker created after the 2020 merger between Mylan and a division of Pfizer.

Greenlight said generic drug pricing has stabilized after a rough period and competition has declined. Meanwhile the company’s revenue and cash flow are growing “and we expect this improvement to accelerate,” it added. Greenlight paid an average price of $10.63 per share.

Syensqo is a chemicals company spun out of Solvay last month. Greenlight called it a global leader in specialty polymers whose products are used in automotive, electronics, healthcare, and other markets. Greenlight paid an average price of 92.32 euros per share.

Greenlight also said it bought small positions in two exchange traded funds of defense stocks “in response to the worsening geopolitical situation.”

“The ongoing wars are depleting ammunition stock piles,” it explained. “We believe this sector is likely to perform well due to both possible escalation of hostilities and the need to replenish ammunition.”

Greenlight conceded that prices have subsequently declined.

At the same time, Greenlight closed out its position in Activision Blizzard, which was acquired by Microsoft, noting its internal rate of return (IRR) was 58 percent.

It also sold its iShares Silver Trust at a “modest loss” and exited Southwestern Energy, which it said was “about flat.”

In the fourth quarter, Greenlight became a Commodity Pool Operator and registered with the U.S. Commodity Futures Trading Commission, according to the letter.

“We chose to register as we were previously limited as to the size of our futures and commodity-linked positions and we were routinely managing our exposures over the past few years to stay within that limit,” Greenlight explained in the letter. “Registering gives us the flexibility to invest as we see fit.”

The firm stressed, however, that it does not expect registration to cause a material change in portfolio construction, but rather enable the firm to better execute its existing strategy.



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