Hedge fund Greenlight Capital mentioned it took a brand new stake in Twitter final month because the social media firm sued to drive Elon Musk to purchase the corporate even because the billionaire entrepreneur mentioned he has modified his thoughts in regards to the deal.
Greenlight founder David Einhorn wrote to buyers on Monday that his hedge fund had taken the place, paying a median $37.24 for the inventory, in line with the letter seen by Reuters.
“At this value there’s a $17 per share of upside if TWTR prevails in court docket and we consider about $17 per share of draw back, if the deal breaks. So we’re getting 50-50 odds on one thing that ought to occur 95%+ of the time,” the letter mentioned.
Einhorn, whose agency gained 8.4% in the course of the second quarter whereas the S&P500 index tumbled 16%, has an extended historical past with Musk after betting, for years, that electrical automotive maker Tesla’s inventory would drop. The 2 males have usually sparred on Twitter.
Now Einhorn is returning for spherical two with Musk not lengthy after Twitter in July sued Musk in Chancery Courtroom in Delaware to make him full the $44 billion acquisition, accusing the billionaire of refusing to honor his obligations to Twitter “as a result of the deal not serves his private pursuits.”
Einhorn argues that the Delaware Courtroom, probably the most distinguished enterprise court docket in america, has purpose to drive Musk to finish the acquisition. “If it lets Musk off the hook, it can invite many future consumers’ regret fits.”
Through the years, the court docket has developed case legislation referring to merger agreements and the “ensuing precedent and clear understanding of consumers’ contractual obligations has created an excessive amount of predictability on this sphere,” Einhorn wrote.
Einhorn mentioned he wrote just a few years in the past, half in jest, that “the accepted actuality seems to be that Elon Musk is above the legislation.” In just a few months, the Delaware Courtroom will rule.
A five-day trial is scheduled for October and Einhorn wrote that he preferred the “the risk-reward” that precedent might be upheld, the letter mentioned.
He declined to jot down about Tesla, which he has not mentioned in a letter since 2019.
Extra typically, Einhorn, whose pronouncements on the financial system and inventory market have lengthy been extensively adopted, mentioned “we proceed to consider we’re in a bear market,” and that the agency is amassing money for future investments.
Within the first half of the 12 months, Greenlight gained 13.2% in contrast with a 20% drop within the S&P500 index. “We achieved our optimistic year-to-date outcome regardless of being internet lengthy within the bear market,” the letter mentioned, noting that undisclosed bets on sure shares carried out nicely.
Greenlight exited a brief place towards C.H. Robinson Worldwide, after a modest loss, and liquidated an extended wager on Rheinmetall after a 125% acquire over just a few months as the corporate benefited from German and European protection spending.