Greenlight Capital Re 3Q14 Earnings Call Notes

posted in: Notes | 0

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Greenlight lost 3.7% in 3Q

“The Greenlight Re investment portfolio loss 3.7% in the third quarter which brings the 2014 net return to 3.2%. It was a frustrating quarter as a lack of winners combined with a normal amount of individual losers led the losses from our long, short and macro positions. Nothing terrible happened, but we just got ground down gradually. In such circumstances, it is not obvious what to do other than stay the course and be patient.’

Thoughts on Apple, Oil States and US Steel

“Apple, which still trades well below our market multiple was our only notable contributor for the quarter as it start price began to reflect the strength of its iOS platform and the enthusiasm for new phones and services. The gain in Apple was roughly offset by a loss in our long position in Civeo, the accommodations business spun off from Oil States International. The stock sold off and management surprised the market with the substantial operating short fall and a decision to not move forward with the re-conversion. We disagree with the company’s actions and believe the company should be levered real estate entity that distributes most of its cash flows.

On the short side, US Steel temporarily benefited from panic ordering due to a shortage of raw materials which led to a spike in hot rolled steel prices. Given the new record spread between domestic steel prices and foreign steel prices, we believe that imports will arrive shortly, steel prices will retrace and the US Steel’s great third quarter will likely be the best result it reports for a long time.”

They were up 2.1% in October though

“We ended the quarter 40% net long which is our lowest net exposure so far this year at any month end. We were well positioned to be opportunistic in a dislocation in early October which was the first real dislocation we’ve seen in a long time. We added to our net long exposure during the correction, which unfortunately was brief. We returned 2.1% in October.’