David Einhorn to speak as the priciest market in decades gets even pricier postelection

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David Einhorn speaking in New York City on April 3, 2024.
Adam Jeffery | CNBC

Hedge fund investor David Einhorn’s cautious stance all year made his performance suffer as he navigated what he believes is the priciest stock market of his career at Greenlight Capital.

Einhorn’s hedge fund returned just 9% in 2024 through the end of the third quarter, net of fees and expenses. That compares with the S&P 500′s more than 20% gain during the same period.

The high-profile investor said he’s neither calling the market a bubble nor being outright bearish, but sky-high prices caused him to be conservatively positioned.

“The market isn’t just making all-time highs. It is, by many measures, the most expensive stock market that we have seen since the founding of Greenlight,” Einhorn said in the latest investor letter last month. Einhorn founded Greenlight in 1996.

Einhorn is speaking at CNBC’s Delivering Alpha Investor Summit on Wednesday in New York City. It will be the first chance for investors to hear from Einhorn postelection and whether his views on equity valuations and inflation have changed with the Trump and Republican policies on the way.

After a buyers’ strike at the end of 2023, Einhorn came back in the market hunting opportunities, acquiring medium-sized positions in names like software firm Alight and drugmaker Viatris. Investors will be interested to hear if he’s still finding any values.

Last month, he made a bullish case for Peloton, saying the shares are significantly undervalued.

Last third of the bull market?

These new stock picks didn’t necessarily create a ton of alpha, however. Greenlight was hurt this year by its low net exposure to the market and a lack of investments in the red-hot Magnificent 7 names.

“We are likely to continue to underperform a rising market, as we have all year, but we don’t wish to position ourselves to lose money should the market continue to rise,” he said in the letter. “We think Paul Tudor Jones is right when he says that managing the last third of a great bull or bear market move is often the toughest.”

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S&P 500, 5 years

Meanwhile, he spent most of this year calling for a reacceleration in inflation, making gold a very large position in his portfolio. This bet has fared relatively well even as inflation has moderated with spot gold hitting a record high in late October, up 27% this year.

Einhorn, a 55-year-old Cornell grad, founded Greenlight Capital nearly three decades ago and went on to produce a whopping 26% annualized return for the next decade, far outpacing the broader market and many peers. He then thrived during the financial crisis, predicting the fall of Lehman Brothers. His stellar track record made him one of the most followed hedge fund managers on Wall Street. In recent years, he’s found some success purchasing value stocks that have buyback strategies in place.

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