Thursday, February 18, 2010

Greenlight Capital 2009 Q4 Letter

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While it appears likely that fourth quarter U.S. GDP will show a very large statistical recovery, supported by a peak in fiscal stimulus and a large sequential improvement in inventories (transitioning from a large drawdown to a small increase), 2010 appears likely to be a “show me” year for the economy. A year ago, it made sense to look through the poor earnings caused by the one-time inventory destocking by paying high multiples of those results. Currently, we believe there is a risk that the market will contract the multiples of higher reported earnings supported by one-time inventory improvements.

Continuing the trend that began when the market recovery took hold this past March, our gains in the fourth quarter came from our long portfolio with a modest loss from our short book.
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Read the Entire Letter.