My favorite chart from Greenlight's 4Q Letter (and their top 5 positions)

Today, Zerohedge posted Greenlight's 2011 4Q letter which I've embedded below.  For those wanting the juicy details, Greenlight's 5 largest long positions were: Apple, General Motors, gold, Market Vectors Gold Miners, and Microsoft.  The two new positions he invested in during the quarter were Dell and Xerox (Editor Note: I am long MSFT, DELL, and GM).


My favorite chart from the entire letter is below:

The last 6 weeks of bullishness has been driven by a combination of bettering of sentiment out of Europe, driven largely in my opinion by the ECB's simply enormous LTRO program, as well as improved economic indicators in the United States. It remains to be seen if Europe can break the cycle laid out above (i.e. we are right now in the 'champagne party').

On the credit side, things feel pretty customary on the new issue front. High yield and bank debt deals are not 3-5x oversubscribed like they are in "go-go" markets.  There has been a pretty good amount of supply but these deals are not flying off the shelves.  IG books are filling quickly with deals going subject very quickly after launch. To me this is a function of more the lack of supply of paper that came to market in parts of the 4Q.

So to me, the appetite for risk is fairly customary and credit markets are not in either of the extremes of extreme bullishness (i.e. you should sell) or extreme bearishness (i.e. you should buy).  Fair value to slightly overbought as investors reach down for yield seems a fair characterization on the current credit markets.


Saj Karsan 1/18/2012  

Was it also your least favourite chart in the letter? There were no other charts! :P


hunter [at] distressed-debt-investing [dot] com

About Me

I have spent the majority of my career as a value investor. For the past 8 years, I have worked on the buy side as a distressed debt and high yield investor.