Greenlight Capital Re 1Q17 Earnings Call Notes

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David Einhorn – Chairman

Seems less likely that the Rite Aid acquisition will see regulatory approval

“Rite Aid was our biggest detractor during the quarter as the company’s proposed merger with Walgreens did not close as expected. We’ve trimmed our position as circumstances have changed, and it now seems less likely the merger will see regulatory approval.”

The bubble will eventually pop

“Our bubble basket of shorts including Tesla also detracted from our performance during the quarter. For the time being, investors remain hypnotized by Tesla’s CEO. They’re skeptical that the company will be able to mass market its model 3 volumes and margins that justify the current valuation. The enthusiasm for Tesla and other bubble basket stocks is reminiscent of the March 2000 dot-com bubble as of the case then, the bulls have rejected conventional valuation methods for a handful of stocks that seemingly can only go up. While we don’t know exactly when the bubble will pop, it eventually will.”

Bought Conduent and Perrigo

“We added a couple of new small long positions during the quarter. We bought Conduent, a Xerox spinoff. We believe the management will renegotiate our exit under earning contracts, run off on profitable business units and simultaneously cut costs, which will lead to improved earnings and revenue growth over the next few years. We also added Perrigo, a private label manufacturer OTC pharmaceutical products. Perrigo is poised to grow its profits in its core U.S. OTC business and to expand margins as it streamlines its portfolio of European OTC brands.”