Einhorn's Greenlight Sticking With Tesla Short, Up +2.1% in July

Aug 1 2017 | 10:00pm ET

Greenlight Capital CEO and billionaire investor David Einhorn isn’t giving up on his famous Tesla short any time soon, saying on Tuesday that Elon Musk’s electric car maker remains overvalued and undercapitalized. 

Einhorn made the remarks during an earnings call for his Greenlight Capital Re reinsurance vehicle, according to a Reuters article. The famed long/short equity hedge fund manager has been on the wrong side of Tesla, up 47% since January 1, although the stock is off late June highs near $385 per share as the more affordable Model 3 begins production – a phase Musk himself characterized as “manufacturing hell” earlier this week.

Einhorn believes the cash drain from the Model 3 will run north of $2 billion this year and leave the company capitalized for only three quarters, he reportedly said on the call. Moreover, he doesn’t believe it will ever make money, he said during a Bloomberg interview in early June, noting that you would get into Tesla if you wanted to buy a business advancing science experiments but not if you wanted to buy a profitable one. Eventually, Einhorn believes, the company’s financial performance will be called to account. 

Meanwhile, although shorts on other high-momentum stocks like Amazon and Athenahealth have been costly, Einhorn's fund has also gained from long positions as the stock market pushes further into record territory. Ending the first half down -2.3%, Greenlight’s flagship fund gained 2.1% in July to narrow year-to-date losses to 0.2%, according to Reuters. 

Einhorn founded Greenlight in 1996 with $1 million in initial capital sourced from family and friends, and has booked annualized net returns of approximately 16% since inception. 

In Depth

Q&A: Portfolio Advisors' Brian Murphy On The Advantages of A Private Markets Platform

Jan 2 2018 | 11:05am ET

Most private markets firms reference their platforms as a source of competitive...


CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Steinbrugge: The Top Hedge Fund Industry Trends for 2018

Jan 2 2018 | 12:22pm ET

Each year, Don Steinbrugge’s Agecroft Partners compiles the insights gained...