(Adds Greenlight investment letter; byline)
By Jennifer Ablan
May 1 David Einhorn's Greenlight Capital Inc.
posted returns of 4.3 percent in April, owing to his short bets
against high-flying momentum stocks and its holdings of Apple
Inc. and Micron Technology, according to sources
familiar with the hedge fund on Thursday.
The April gains brought the $10 billion hedge fund's gains
to 3.1 percent for this year to date. Greenlight, which was down
1.5 percent in the first quarter, said in a letter last week
that the hedge fund had started shorting a group of momentum
stocks that the firm did not identify.
"There is a clear consensus that we are witnessing our
second tech bubble in 15 years," Greenlight said. "In our view,
the current bubble is an echo of the previous tech bubble, but
with fewer larger capitalization stocks and much less public
Losses in technology and biotech stocks have hurt a slew of
hedge funds in March and April, with the Nasdaq Composite Index
dropping more than 5 percent since March 5 when it reached the
highest level in almost 14 years.
As for its short position in momentum stocks, Greenlight
dubbed them "The Bubble Basket" and added that it had limited
its short bets against certain momentum stocks because such bets
can be "dangerous" when stock prices become disconnected from
companies' fundamentals. "What is uncertain is how much further
the bubble can expand, and what might pop it," the letter said.
Greenlight also benefited from its long-term holdings in
Apple and Micron. Shares in Apple, one of Greenlight's largest
holdings as of the first quarter, were up about 10 percent in
April alone while Micron Technology, another large holding,
gained more than 10 on the month.
"At quarter-end, the largest disclosed long positions in the
Partnerships were Alpha Bank, Apple, gold, Marvell Technology,
Micron Technology and Oil States International. The Partnerships
had an average exposure of 120 percent long and 71% short,"
Greenlight said in its letter last week.
A spokesman for Greenlight declined to comment.
(Reporting By Jennifer Ablan)