Market Overview

Highlights Of Greenlight Capital's Q4 Conference Call


Greenlight Capital Re, Ltd. (NASDAQ: GLRE) hosted its fourth quarter conference call on Tuesday to discuss its performance and outlook.

Greenlight Re generated an underwriting profit before general expenses of $6.8 million and a $45.5 million loss on its investment portfolio. Overall, the company's fully diluted adjusted book value per share fell by 4.8 percent in the quarter and fell 27.9 percent for the year to $22.17.

Greenlight Re's written and earned premiums increased due to a combination of growth in its renewal portfolio and new business.

"Historically, we have focused on a small number of large deals in the portfolio and we continue to target large deals," Bart Hedges, CEO of Greenlight Re said. "However, throughout 2015 we also targeted new business with large carriers that purchase reinsurance across a wide range of lines of business. Initially, we focused on developing these new relationships and then on expanding them. This proved to be successful as a good deal on the new business growth came from multiple transactions with the new partner."

Hedges also noted that the firm's maximum exposure to a single event is currently $165.4 million and maximum exposure to all events is $236.3 million.

David Einhorn's, Greenlight Re's Chairman discussed the fund's investment results and overall strategy.

Einhorn stated that the Greenlight Re investment portfolio lost 4 percent in the fourth quarter and lost 20.2 percent for the full year. The short portfolio was responsible for most of the losses in the quarter and the current environment remains "unfavorable for our value style."

Einhorn added that the investment fund initiated new long positions in Macy's, Inc. (NYSE: M), Mylan NV (NASDAQ: MYL) and E.ON, a European utility company.

Notable exits for the quarter include Micron Technology, Inc. (NASDAQ: MU), Bank of New York Mellon Corp (NYSE: BK), Applied Materials, Inc. (NASDAQ: AMAT) while also closing a short position in ARM Holdings plc (ADR) (NASDAQ: ARMH).

"We also had a lack of winners to offset our losers and had our worst year by far in this regard," Einhorn said. "All of our winning positions in 2015 added up to a 19% gross investment return. The second worst year in our history was 31% and our 20-year average is 51%. Many of the stocks are portfolio had relatively solid fundamental performance last year, but went unrewarded. We hope this trend reverses in 2016. We believe that strong balance sheets and multiple of cash flow and earnings are ultimately appreciated by market participants over time."

Einhorn also highlighted "cash rich" companies in the fund's long portfolio, including Apple Inc. (NASDAQ: AAPL) and General Motors Company (NYSE: GM). Overall, the fund is 26 percent net long while remaining short a "bubble basket of momentum stocks that seem disconnected from traditional valuation metrics."

Posted-In: Bart Hedges David Einhorn David Einhorn Stock Picks Greenlight CapitalEarnings News Hedge Funds General


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