* Einhorn's shorts help pull performance down in Q1
* Einhorn's prominent shorts including St. Joe, Moody's
* Long side of the portfolio fared well
By Svea Herbst-Bayliss and Matthew Goldstein
BOSTON/NEW YORK, April 11 Hedge fund manager
David Einhorn is coming up short this year largely because some
of the bets he made on stocks falling haven't panned out.
In the first quarter, Einhorn's Greenlight Capital
Qualified LP dipped 2.9 percent, compared to an average 2
percent gain for the hedge fund industry.
A Greenlight investor said the New York-based hedge fund
firm underperformed because its so-called short positions,
where investors bet that the stock price will drop, lost 9.2
percent in value during the period.
By contrast, the fund's bet on stocks and other assets
rising in value performed well, increasing 6.7 percent. Part of
Einhorn's long portfolio has included gold, the kind you can
touch, and bets on BP (BP.L) and Vodafone Group (VOD.L). Fund
managers will not be releasing their first-quarter holdings
A spokesman for the fund firm declined to comment.
While Einhorn, who has been managing money since 1996 and
has returned an average 20 percent to investors a year, does
not say which companies he is shorting, it is highly likely
that much of this year's pain came from Florida real estate
company The St. Joe Co (JOE.N).
Only six months ago Einhorn, who was among the first to bet
against now-bankrupt investment house Lehman Brothers, made a
very public call against St. Joe at the annual Value Investing
Congress in New York.
As Einhorn illustrated his case with slides showing empty
condominiums sitting in fields of weeds, other investors gasped
at his statistics-filled presentation. St. Joe's share price
tumbled quickly and closed off nearly 10 percent that day.
But this year, St. Joe has gained 14.7 percent during the
first quarter, thanks largely to the efforts of investor Bruce
Berkowitz, a mutual fund manager whose Fairholme Capital
Management is the biggest investor in St. Joe.
When Einhorn first spoke publicly about St. Joe, Berkowitz
declared himself so pleased that the hedge fund manager had
pushed down the share price briefly that he wanted to thank
Einhorn by sending a box of chocolates.
This year, Berkowitz has already shaken up St. Joe's board
and said a range of other options to move the company forward,
ranging from acquisitions, to restructuring to capital raising,
could be considered.
Einhorn's investors might have also suffered from the
manager's bet on a decline in the stock of rating agency
Moody's Corp (MCO.N), which he said uses an inappropriate
short-term approach to its assessments. The company gained 28.3
percent during the first quarter.
While Einhorn's long positions, including a bet on BP and
gold, fared well during the first quarter, they have been
unable to make up for the other side of the portfolio so far.
(Reporting by Svea Herbst-Bayliss and Matthew Goldstein;
Editing by Richard Chang)