"In the last three years, our results have been much worse than we could imagine, and it was also a bull market."
This is clear from the quarterly letter from Tuesday that Greenlight Capital – the hedge fund of David Einhorn – was sent to investors and dealt with the reasons for the underperformance of the formerly high-flying company.
The letter notes the second quarter The loss of Greenlight Capital funds amounted to 1
SPX, + 0.49%
posted a quarterly return of 3.4%, bringing its annual return to 2.6%.
Reads: Hedge fund giant Einhorn says he has "never done so badly"
The letter details a number of poorly performing assets, including MetLife Spinoff Brighthouse Financial
BHF, + 1.07%
and General Motors Co.
GM, + 0.64%
GM, + 0.64%
Greenlight said that it has taken action to "mitigate our problems" by managing the gross exposure and the individual position sizes managed to increase the use of options in its short book. For example, the letter said that Greenlight has covered most of its short bet on Netflix Inc.
NFLX, + 0.74%
at $ 281.46 from January to April, while stocks ended the quarter at $ 391.43
Meanwhile, Einhorn dismissed theories about the poor performance, including " aging, changing lifestyles, and unwillingness to adapt to new market environments. "
" We were accused of being stubborn, but the stubbornness of one person is the discipline of another person, "he said. "We will continue to be disciplined, and while it may be nice to blame for the poor results, in truth, we have made every effort to move forward with our best thinking."
Einhorn found a difficult environment for value investing Citing data that showed this strategies have suffered a long underperformance. That should come to an end, although it is still unclear when.
"At the moment, the market is telling us that we are wrong, wrong, wrong in almost everything, and yet, from today on, we think that this portfolio is very meaningful," he said.