Einhorn Takes His Lumps in Yahoo! (YHOO) But Shows Great Discipline
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David Einhorn just told investors of his Greenlight Capital hedge fund about the lumps he took in his Yahoo! (Nasdaq: YHOO) investment amid the Alipay situation.
Einhorn said his fund, which bought the position earlier this year, exited with a modest loss. He explained the shares were bought based on a sum-of-parts analysis, which included putting substantial value on the company's Chinese assets. However, shortly after the firm's purchase the value of these assets came in doubt when the CEO of Alibaba, Jack Ma, put the Alipay subsidiary into his personal control which created mistrust and finger pointing among the parties involved. "This wasn't what we signed up for," Einhorn said.
While the sale was a loss, it shows great investment discipline by Einhorn. Great traders know that when a catalyst or thesis doesn't play out, you have to cut your losses and move on. Never get tied emotionally to a trade.
Yahoo! may still be a great value, but Einhorn isn't going to stick around to find out.
Einhorn said his fund established a position in Yahoo at a average price of $16.93. Shares closed yesterday's session at $15.81. At the end of Q1 the fund held 8,500,000 Yahoo shares.
You can see more of Greenlight Capital's stock positions at StreetInsider.com's Hedge Fund Insider.
H/T: Einhorn's Q2 letter was posted at Zerohedge.
Einhorn said his fund, which bought the position earlier this year, exited with a modest loss. He explained the shares were bought based on a sum-of-parts analysis, which included putting substantial value on the company's Chinese assets. However, shortly after the firm's purchase the value of these assets came in doubt when the CEO of Alibaba, Jack Ma, put the Alipay subsidiary into his personal control which created mistrust and finger pointing among the parties involved. "This wasn't what we signed up for," Einhorn said.
While the sale was a loss, it shows great investment discipline by Einhorn. Great traders know that when a catalyst or thesis doesn't play out, you have to cut your losses and move on. Never get tied emotionally to a trade.
Yahoo! may still be a great value, but Einhorn isn't going to stick around to find out.
Einhorn said his fund established a position in Yahoo at a average price of $16.93. Shares closed yesterday's session at $15.81. At the end of Q1 the fund held 8,500,000 Yahoo shares.
You can see more of Greenlight Capital's stock positions at StreetInsider.com's Hedge Fund Insider.
H/T: Einhorn's Q2 letter was posted at Zerohedge.
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