In the second quarter, David Einhorn’s Greenlight Capital sold tech stocks in order to buy retail shares, according to a public filing of its holdings as reported in a recent article in Barron’s.
The article notes that the filing is merely a snapshot of the fund’s holdings at a moment in time and is therefore “an imperfect picture of Einhorn and Greenlight’s investing thesis.” But the fund’s second-quarter purchases of Gap, Best Buy, and TJX Companies, it says, suggests that “Greenlight is betting on consumers.”
Although the article says the fund has had a tough time “sniffing out good investments in the past few years,” it adds that it “may be onto something: There’s a good case for retail right now.” The article reports that outlook for the sector “is brighter than it’s been in a long time, with soaring consumer confidence and retailer’s cleaning up their portfolios of physical stores, helping margins.”
The article also notes that Greenlight has sold retail holdings in other companies, including Dillard’s, DSW and Abercrombie & Fitch. “Greenlight’s positioning,” it says, “appears to skew toward retailers targeting lower-income consumers.”
A tight job market and strong income levels are keeping consumer sentiment robust and holding steady, the article reports, despite expected increases in both interest rates and inflation as well as trade war concerns.
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