By Alistair Barr
SAN FRANCISCO (Dow Jones) - David Einhorn generated gains of
almost 5% during the first quarter, recovering from a difficult
year in 2008, according to the investment results of Greenlight
Capital Re, a reinsurer that invests its premiums with the hedge
fund manager.
Einhorn, who runs hedge fund firm Greenlight Capital, is also
chairman of Greenlight Capital Re (GLRE), which reinsures a variety
of property and casualty risks.
While most reinsurers plough premiums into bonds and other
fixed-income and credit-related securities, Greenlight Capital Re
invests almost all its premiums with Einhorn, who specializes in
long/short equity trading.
Greenlight Capital Re reported investment losses of almost 18%
in 2008, partly because Einhorn's strategy was disrupted by a
temporary ban on shorting, or betting against more than 800
financial-services stocks. Einhorn was also betting against
Volkswagen when shares of the German automaker surged in the wake
of a Porsche induced short squeeze.
Einhorn rebounded from those losses during the first quarter of
this year. Greenlight Capital Re said it generated investment
returns of 5.5% in March, after fees and expenses. That left the
reinsurer's portfolio up 4.5% in the first quarter. The Standard
& Poor's 500 Index lost 12% in the first quarter.
Greenlight Capital Re's investment returns so far this year have
been better than the 2.5% gain forecast by UBS insurance analyst
Brian Meredith.
"The latest monthly returns also show much lower volatility
compared to prior year," Meredith added in a note to investors on
Thursday.
Still, Meredith said that Greenlight Capital Re shares probably
won't trade at much of a premium to book value, given the
reinsurer's "heavy dependence" on investment returns, which makes
earnings "very volatile."
Greenlight Capital Re shares rose 2.7% to $17.22 during morning
trading on Thursday.
