Greenlight Capital is an American hedge fund founded in 1996 by David Einhorn. Greenlight invests primarily in publicly traded North American corporate debt offerings and equities.[2] Greenlight is most notable for its short selling of Lehman stock prior to Lehman Brothers' collapse in 2008[3] and the $11 million fine they received in January 2012 for insider trading in the UK.[4] Einhorn remains the fund's manager.
It also operates Greenlight Capital Re, a property casualty reinsurer.[2] Unlike other funds, Greenlight does not use borrowed money, or leverage. The firm does not generate large trading volumes.[3] It also manages a fund of funds and a private equity fund through its affiliates, Greenlight Masters and Greenlight Private Equity Partners.
As of 2008[update], there were 25 employees, including nine analysts and one trader. It occupies a single high floor of an office building near Grand Central, in New York City.[3]
History
Foundation and early years
Founded in 1996 by Einhorn, with $900,000 (half borrowed from Einhorn's parents).[5] Greenlight generated greater than a twenty-five percent annualized net return for its investors until 2007, but lackluster results later brought this to under fifteen percent [3] It prospered in its early days by identifying weak financial firms for short selling, making significant gains from Conseco, CompuCredit, Sirrom Capital, and Resource America.[3]
A few months before the dot-com bust, Greenlight lost 4% of its total capital on a short on Chemdex stock as it soared in price. A few months after Greenlight closed its position, Chemdex stock plunged to $2.[3]
2007–2008 financial crisis
In the third quarter of 2008, Greenlight lost 15% of its value,[6] primarily from long positions on industrial companies like Helix Energy Solutions,[6][7] when the SEC temporarily banned short selling of financial stocks.[8] With the majority of Greenlight's money in bonds and long positions on stocks, this stopped hedge funds minimizing 'long' losses or offsetting them with short gains.[9] Greenlight ended 2008 down 23%, its first annual loss.[10] In 2009 Greenlight recouped its losses from 2008.[11]
Einhorn and Greenlight Capital were fined by the FSA for insider trading in January 2012.[12]
2015–2020 underperformance
Greenlight Capital was down 20 percent for 2015.[13]
In February 2015, Greenlight Capital was ranked 53rd out of 58 hedge funds, with a D grade, in the Institutional Investor's Alpha Hedge Fund Report Card. This was the second year in a row Greenlight Capital received a D from IIA.[14]
Greenlight Capital greatly underperformed the bull market in 2017. For January 2018, Greenlights funds were down 6% for the month where the S&P 500 was up 5.6%.[15][16]
In March 2020 the fund posted loss of 21.5% as the global coronavirus pandemic drove the stock markets down.[17]
Top equity holdings
As of 2019, the top equity holdings of the firm were in the shares of the following companies: Green Brick Partners, Brighthouse Financial, Ensco, General Motors, Exela Technologies, CONSOL Coal Resources, and Altus USA.[18]
Greenlight Capital lowered its stake in Apple by 6.2 percent to 8.6 million shares during the fourth quarter of 2014, despite Apple shares being up 15 percent in the year.[19]
Philanthropy
In 2009, Greenlight Capital donated $7.2 million to three charities: Tomorrows Children's Fund, the Center for Public Integrity (CPI) and the Project on Government Oversight (POGO). The Tomorrows Children's Fund received $2.6 million, CPI received $1.8 million, and POGO received $1.8 million.[20]
Political contributions
In 2012, Greenlight Capital ranked 5th out of WNYC's top 10 hedge fund political donors. The hedge fund contributed $592,729.88 to New York State political campaigns in 2012.[21]
Lawsuit with an ex-employee
In May 2024, a former employee at Greenlight Capital, James Fishback sued the hedge fund for defamation in a row over his job title.[22] James Fishback claimed he worked as “head of macro” at the New York hedge fund, but Greenlight Capital claimed that position never existed.[22] The controversy was covered in various news outlets.[22][23]
Fishback said that in the two-and-a-half years he worked at Greenlight Capital, he was promoted twice; first from research analyst to trader and then to head of macro, having generated a total $100 million in profits for the New York fund during his tenure.[24] Morever, Greenlight Capital said it did have its "best year" in its macro portfolio in 2022, during Fishback’s tenure.[25]
On June 25, 2024 Greenlight Capital filed a suit in New York Court that the ongoing case with James Fishback over his job title is hurting its business.[26] Greenlight called on the New York court to place a “permanent injunction” on the ex-staffer; Fishback, to block him from referring to himself as its former “head of macro.”[26] Fishback described Greenlight Capital’s lawsuit as a desperate ploy by the hedge fund to save face.[26]
