A digest of some of the top insights that I’ve gathered from this week’s earnings calls. Full notes can be found here.
“The Greenlight Re investment portfolio returned 6.6% in the fourth quarter and 19.6% in 2013. During the quarter our longs outperformed the S&P 500, our shorts went up less than the market and macro-positions led by Yen, were a slight contributor. This is also the case for the full year as we generated alpha in both our long and short portfolios and had gains in our macro-positions. During the quarter the largest contributors to our results were long positions in Apple, Marvell and Micron Technologies.
The biggest detractors were short positions in Chipotle and U.S. Steel. Our portfolio performed well in the melt-up environment in 2013 as investors priced in lower unemployment and improved home prices. A number of new long positions contributed to our performance. We also avoided getting hurt too badly in our short portfolio by having minimal exposure to the most speculative stocks many of which appeared to have completely disconnected from normal valuation methods.
We established a position in Micron in the second half of the year, we believe the company can earn $4 per share in the Calendar year 2014 and it is well positioned to benefit from favorable dynamics from consolidated in the DRAM and Flash memory industries. We also added two energy long positions during the quarter, Anadarko Petroleum and British Petroleum. The market ended the year on a strong note after a huge move that was supported mostly by multiple expansion as earnings growth was lack luster. In 2013 the market rewarded many companies repeating [ph] earnings after they had lower guidance. This trend is not likely to continue indefinitely.
During the month of January our net exposure decreased about 10 points to 45% as we reduced our exposure on both long and short size. We continue to hold macro positions in gold throughout the end and in short sovereign debt. Our goal in 2014 remains to protect capital in an uncertain environment and define investment opportunities that will generate alpha on both our long and short portfolios. 2013 was a good year for Greenlight Re. We had decent results on both our underwriting and investment activities and solid growth in fully diluted book value per share. We believe we can be better on both sides of our dual engine strategy but are pleased with how the past year has shown our business strategy at work.”