by winston » Thu Jul 10, 2014 6:23 am
David Einhorn
Age: 45
Chairman of the Board of Greenlight Capital Re Ltd (GLRE)
David Einhorn (Trades, Portfolio) is the Chairman of Greenlight Capital Re, a reinsurance company named after his hedge fund, Greenlight Capital.
Einhorn started his hedge fund in May of 1996 and has delivered annualized returns of 19.5 percent, net of fees and expenses. During the same period (May 1996 – December 2013), the S&P 500 returned an annualized 7.8 percent including reinvested dividends.
Einhorn graduated summa cum laude from Cornell University with a B.A. from the College of Arts and Sciences. He is a guru that we follow at GuruFocus and has a long/short value-oriented strategy. Einhorn believes that an investment approach emphasizing intrinsic value will achieve consistent absolute returns and safeguard capital regardless of market conditions.
He is a noted activist investor, taking positions in companies, and then pushing management to implement changes. On the short side, he was able to detect the wrongful accounting of Allied Capital in 2002 and also shorted Lehman Brothers a year before they went bankrupt.
Greenlight Re, the reinsurance company, is headquartered in the Cayman Islands. Reinsurance is the process by which the reinsurer takes on all or part of the risk covered under a policy issued by an insurance company in consideration of a premium payment. Einhorn has an experienced team of executives in place to run the company from an operational standpoint.
The float and excess capital of Greenlight Re is handled by the hedge fund company to provide superior returns. The float of an insurance company is the cash on hand from premiums paid that have not had to be paid out yet. By having profitable underwriting on the insurance side, the float acts as free leverage for investments.
The top five long holdings of his hedge fund are Apple (AAPL), Micron Tech (MU), Marvell Tech (MRVL), Cigna (CI), and Oil States International (OIS). The company is relatively new and started underwriting in 2006. Greenlight Re had a tough stretch of underwriting losses from 2010-2012, but is operating with an underwriting profit again.
Greenlight Re has a market cap of $1.25 billion, making it a small cap stock. The price-to-book (P/B) ratio is 1.18. P/B ratios are commonly used when measuring the value of companies run by investing gurus. The book value is the value of the assets minus liabilities. Book value per share has been growing at a rate of 8.39 percent over the past five years, and the median P/B over the same time period has been 1.2. Berkshire Hathaway currently has a P/B ratio of 1.40.
So far this year, the stock has been bought by four of the gurus we follow. Chuck Royce is the largest holder with 1,184,685 shares, representing about 3.2 percent of the shares outstanding. In total, there are 7 gurus currently holding the stock.
Source: GuruFocus
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