Billionaire money manager David Einhorn is in the midst of one of his hedge fund's worst-performing years so far. The investor's Greenlight Capital lost a whopping 7.6% for the month of August alone, according to CNBC. That brings the fund's total losses for the year up through the beginning of September to 25.1%. These losses are put into perspective, too, when compared to the performance of some of Einhorn's rival money managers; Daniel Loeb's Third Point Partners, for instance, has remained essentially even for the year, while Bill Ackman's fund has climbed by about 15% in 2018 up to this point.
General Motors and Tesla
Much of Greenlight's dismal performance in August is due in large part to two failed bets, both on car manufacturers. Einhorn lost bets on both General Motors (GM) and Tesla (TSLA), each of which moved against him. In a letter to investors sent each month, Einhorn updated his clients about his fund's performance but "gave no specific reason for the fresh losses," according to the report. Shares of GM, which constitutes one of Greenlight's largest holdings, fell by about 3.4%. At the same time, Greenlight stood apart from many other financial companies in adopting a short position on Elon Musk's Tesla, predicting that the high-flying car company would fall. Although Tesla has faced some troubles and lots of public speculation, it has yet to disappoint investors. In the end, although TSLA went up and down repeatedly throughout August thanks to Elon Musk's announcement about his decision to take the company public, the stock ended up climbing to end the month when Musk reversed his position. Though things have changed since the end of August.
Future for Einhorn
Like most hedge fund investors, clients of Einhorn have grown frustrated with his firm's failure to outperform the S&P. This has prompted many investors to withdraw their funds. With August's numbers now available, it's likely that there will be more departures at the end of the year; this is the next time that Greenlight will allow investors to redeem their money.
Loeb and Ackman
Loeb's Third Point is not performing well compared with investor expectations of hedge fund returns, make no mistake. His fund climbed by just 0.1% in August, bringing its yearly return to date up to just under 1%. This is well under the return levels of the S&P. However, in comparison with Einhorn's fund, Loeb is at least generating positive returns. By comparison, the average hedge fund has fallen by about 0.5% so far this year.
Bill Ackman is the hedge funder in this narrative who has managed to win big. Strong performances in Chipotle Mexican Grill (CMG) and Lowe's Companies (LOW), among others, have pushed his fund to new highs. Ackman's Pershing Square has gained roughly 15% for the year, according to the report.