Einhorn Shorted Herbalife Last Year

Jan 24 2013 | 10:59am ET

Months before fellow activist William Ackman of Pershing Square Capital Management called nutritional supplements company Herbalife a "pyramid scheme," it was widely assumed that Greenlight Capital's David Einhorn would be the hedge fund manager who took down the company.

But after causing a flurry in May with a strongly-worded question during Herbalife's earnings call, Einhorn clammed up. He even specifically said in October that he would not offer a Herbalife thesis at a conference.

It turns out, however, that he was shorting Herbalife all along. Einhorn told investors at Greenlight's annual conference that the hedge fund had successfully bet against the company last year, The Wall Street Journal reports. Einhorn said that he closed out the short last year, meaning he avoided the roller-coaster ride that began with Ackman's attack and has continued as Herbalife fights back and other hedge fund managers, including Dan Loeb, who is long Herbalife, take sides.

Einhorn did not say how large a short he had on Herbalife or how much he had made. He also did not mention it in Tuesday's fourth-quarter wrap up for investors. But it was a bright spot in what Greenlight referred to in the letter as a "pedestrian" year; a rough quarter cut Greenlight's return for the year from double-digits to 7.9%.

And a bright spot among Greenlight's shorts, which were a disaster in the fourth quarter: The firm wrote that its average short rose 10% on the quarter, including a 74% surge for Green Mountain Coffee Roasters. On the long side, Greenlight was burned by a swoon in Apple shares.

"Our coffee was too hot, our apple was bruised, and our iron supplements didn't go down smoothly," Greenlight wrote.


In Depth

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

Nowhere to Hide: Why the Future of Asset Management Depends on Innovation

Nov 15 2016 | 6:55pm ET

Information technology has reshaped the asset management industry’s periphery,...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR