Shares of Twitter (NYSE:TWTR) are in the spotlight after it was announced that David Einhorn’s Greenlight Capital had reinvested in TWTR stock for an average price of $37.24 per share. During the first quarter, the hedge fund sold all of its 243,750 shares. The fund carries an average holding period of 5.25 quarters for stocks in its portfolio.
Einhorn founded Greenlight in 1996 and currently has an estimated net worth of $1.2 billion. Meanwhile, his hedge fund is having an exceptional year, returning 13.2% during the first half of the year. For context, the S&P 500 declined about 20% during that time period.
The exact position size was not disclosed, although investors can assume the stake is less than 5% of shares outstanding. Any stake greater than 5% would warrant a 13D or 13G filing.
Let’s get into the details.
David Einhorn Discloses TWTR Stock Position
Einhorn believes that the Delaware Court of Chancery will rule in Twitter’s favor over Elon Musk in relation to his $44 billion acquisition of the company. He explained:
“At this price there is a $17 per share of upside if TWTR prevails in court and we believe about $17 per share of downside, if the deal breaks. So we are getting 50-50 odds on something that should happen 95%+ of the time.”
Furthermore, Einhorn believes that the Delaware court has reason to force Musk to complete the purchase, explaining: “If it lets Musk off the hook, it will invite many future buyers’ remorse suits.”
Meanwhile, the fund manager has a history with Musk and has previously shorted Tesla (NASDAQ:TSLA). The two have even argued on Twitter in the past. During Q1, however, Einhorn completely sold off his put position against 100,000 shares of TSLA in what could be regarded as a capitulatory move.
The Chancery court has already set the Twitter/Musk court date, which will occur from Oct. 17 to Oct. 21. On top of that, Twitter has confirmed Sept. 13 as the date for which shareholders can vote for or against the acquisition.
Adding more fuel to the flame, Musk disclosed last week that he had countersued Twitter. The 164-page countersuit is confidential, but likely contains information on Twitter’s internal bot count estimate of less than 5%.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
