Losses from short selling, a rap performance at an anniversary celebration, and criticism of SpaceX: what Einhorn wrote to investors

Legendary short seller David Einhorn, known for his public bet against Lehman Brothers shortly before the bank’s collapse, summarized the second quarter: Greenlight lost money on bets against the market but expects to recoup its losses thanks to the new Fed chair’s policy.

In the second quarter of 2026, Einhorn’s Greenlight Capital funds lost 4.3%, while the S&P 500 rose 15.2%. In a letter to partners, Einhorn attributed the underperformance to losses on short positions and losses on gold and U.S. interest rates. The exact nature of the fund’s positions was not specified. Part of the losses on short positions came from companies in market segments that Greenlight considers to be the most overheated.

The second quarter wasn't all bad news for Greenlight: in May, the fund celebrated its 30th anniversary. At the event, Einhorn performed his own version of Eminem’s “Lose Yourself,” rewriting the lyrics to fit Greenlight’s story—about a once-in-a-lifetime chance, growth, and an opportunity that cannot be missed.

In his letter, Einhorn devoted special attention to SpaceX, whose IPO he considers one of the most striking examples of market frenzy. Investors who got in on SpaceX during its private funding rounds have reaped significant returns, Einhorn said, but Greenlight had reservations about the company’s valuation.

Einhorn acknowledges that data centers in space, resource extraction on asteroids, or flights to Mars may eventually become a reality, but he believes that even taking these scenarios into account, the risk-adjusted present value of SpaceX’s shares does not come close to the company’s current market capitalization.

Greenlight has just as many questions about SpaceX’s credit rating. Rating agencies have assigned the company an investment-grade rating, even though, as Einhorn writes, SpaceX will continue to have a negative free cash flow for several more years. Greenlight notes that it has been unable to find comparable cases in which a company with such characteristics has received an investment-grade rating.

The second-quarter report showed that, as of June 30, the fund did not hold any SpaceX shares.

The fund entered the second quarter with a conservative portfolio: David Einhorn focused primarily on capital preservation, but this strategy did not prevent losses. Long positions generated about 9% for the fund, but short positions nearly wiped out that gain. At the same time, as Greenlight acknowledges, both the gains on long positions and the losses on short positions were primarily driven by market movements rather than the selection of specific securities. The fund lost nearly 4% of its return on macroeconomic positions, primarily in gold and U.S. interest rates.

In the second quarter, Greenlight opened small positions in the media conglomerate Comcast, the industrial companies Fortune Brands and Versigent, the consumer goods company Primo Brands, and the fintech company PayPal. The fund primarily bought companies whose shares had fallen significantly in price or, in its assessment, were trading substantially cheaper than comparable peers, but still had potential for earnings and cash flow growth.

At the same time, Greenlight closed its positions in the Greek energy company Public Power Corp, the women’s lingerie brand Victoria’s Secret, and the oilfield services company Weatherford International. The average annual returns on these investments were 30%, 157%, and 45%, respectively. In all three cases, the fund exited the holdings after their value had risen significantly and the companies’ business performance had improved.

As of the end of the second quarter, Greenlight’s portfolio remains fairly concentrated. Nearly 19.5% is accounted for by the construction company Green Brick Partners; the top five holdings also include the construction corporation Fluor with a 6.3% stake, the energy company Core Natural Resources at 4.7%, financial firm Brighthouse Financial at 4.6%, and psychiatric hospital and clinic operator Acadia Healthcare at 3.3%. Together, these holdings account for about 38% of the portfolio.

Greenlight considers the Fed’s policy to be one of the key factors for the stock market through the end of the year. The regulator’s new chair, Kevin Warsh, has repeatedly stated that he will not allow inflation to exceed 2%, and the fund believes the market has already taken this signal seriously. Since Warsh’s confirmation, inflation expectations for the coming year have fallen from 3.45% to 1.79%, the fund noted.

Therefore, Greenlight expects that no further rate hikes will be necessary this year: such a scenario would allow the fund to recoup some of the losses it incurred due to its interest rate position.

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This article was AI-translated and verified by a human editor