David Einhorn’s Greenlight Capital is touting a new stake in Brighthouse Financial Inc., an annuities and life insurance company spun out of MetLife Inc. in August, as the hedge fund tries to rebound from a disappointing year.
Brighthouse, which has more than $220 billion in assets, is a more capital-intensive operation than the businesses that MetLife kept, and is closely linked to fluctuations in financial markets. Analysts are “laser focused” on the company’s downside risks from a bear market, rendering them “too pessimistic” about the company’s shares, Greenlight wrote in a quarterly letter to investors Tuesday seen by Bloomberg. Shares trade at a 40% to 50% discount to similar companies, the money manager wrote.
Einhorn’s hedge funds lagged rivals and markets last year, rising 1.6%. The average hedge fund rose 6.5% while the S&P 500 Index returned nearly 22%.
“This must be frustrating to you, our Partners. It is certainly frustrating to us,” the firm wrote in the letter. It said losses came from its “bubble basket” of technology shorts — including Amazon Inc., Athenahealth Inc., Netflix Inc. and Tesla Inc. — and a wager against Caterpillar Inc.
Greenlight also said it took a small position in Twitter Inc. With improvements in user experience, the number of visitors and the time they spend on the site has grown, the firm said.
“As a result, we believe TWTR will have a pitch to advertisers in 2018, which should lead to revenue growth,” Greenlight wrote.
—With assistance from Katherine Chiglinsky.
—Read Brighthouse, Pru Say Their Annuity Operations Look Good on ThinkAdvisor.