Greenlight Capital Drenched In Red

Jan 26 2009 | 2:09am ET

Activist hedge fund shop Greenlight Capital’s flagship fund fell by almost a quarter last year, the first time it has suffered an annual loss.

The firm’s eponymous $5.1 billion fund fell 23% last year, Bloomberg News reports. In a Jan. 20 letter to investors, Greenlight said it made “too many mistakes” last year, especially its bets on Helix Energy Solutions Group and Volkswagen.

“We added aggressively to our position in [Helix] at exactly the wrong moment,” as Hurricane Gustav devastated its production in September. The stock lost 70% of its value in the fourth quarter.

On the short side, Greenlight’s bet against Volkswagen backfired in abig way when the stock nearly quadrupled in price on word that Porsche was increasing its stake in the German automaker.

“We held our nose and covered a portion of our position at a significant loss,” Greenlight told investors.

The firm gave its clients some insights into how it planned to turn things around, pointing to increased stakes in utility Allegheny Energy and communications equipment maker CommScope. The fund is also betting on gold, gold companies and the yen.


In Depth

Creating An Offshore Hedge Fund Dream Team: The Seven Key Players

Jun 26 2015 | 6:47am ET

If you want to set up an offshore hedge fund, like any great team, you’re only...

Lifestyle

Hedgies Set to Compete in Wall Street Decathlon

Jun 8 2015 | 12:37am ET

The Wall Street Decathlon — a 10-event physical challenge that will crown “Wall...

Guest Contributor

6 Essential Principles To Balance Your Investment Risk

Jun 26 2015 | 10:07am ET

In this article, financial expert Greg Silberman explores how to hedge a private...

 

Editor's Note