Key Takeaways
- • Macro investing drove virtually all of Greenlight Capital's 9% return in 2025, but the same strategy produced the fund's 1.5% loss for the first nine months of 2026, according to Greenlight's third-quarter client letter dated October 21.
- • The macro book lost 6% year-to-date through September 2026, with longs costing 5.1% and shorts contributing a 0.6% offset.
- • Greenlight attributed the macro losses to a wrong bet that the Federal Reserve would cut interest rates, a position it sized on the expectation that President Trump would appoint a Fed chair who would push for lower rates.
- • The fund cut the position by one-third in the third quarter for risk management and says its remaining position extends into next summer.
- • In 2025, gold rose 64% and copper rose 40%, with Greenlight expressing its commodity views directly through futures and options rather than mining equities.
Summary
Macro investing has been the main driver of performance at Greenlight Capital, the value-oriented long-short hedge fund led by David Einhorn, according to Institutional Investor. The strategy accounted for virtually all of the fund's 9% return in 2025, while it also produced the fund's 1.5% loss for the first nine months of 2026. Institutional Investor reported Greenlight's September and year-to-date results previously and drew on the firm's third-quarter client letter, dated October 21, for strategy-level detail.
The letter shows the macro book lost 6% over the first nine months of 2026. Long positions subtracted 5.1% from year-to-date performance, while shorts contributed 0.6%. In the third quarter alone, macro detracted 2%, with longs costing 8.5% and shorts offsetting 7.1%.
Greenlight attributed the largest macro loss to a wrong bet that the Federal Reserve would lower rates. The fund said the loss was "a couple of points more than the macro book's total loss this year." When it entered the position, the market expected one to two rate cuts, and Greenlight sized it on the belief that President Trump would appoint a Fed chair who would push for lower rates, with a reasonable worst case of no cuts. As the Fed raised rates and markets priced in further hikes, the fund's losses exceeded its expected worst case. Greenlight said it continued to believe the market had overpriced an adverse outcome, and it cut the position by one-third in the third quarter for risk management. The remaining position extends into next summer, and the fund said it would recover part of the loss if the market is proven wrong about further hikes.
In 2025, most macro investments were profitable. Gold appreciated 64%, and a medium-sized copper position, expressed through options on copper futures, was a "notable winner" as copper prices rose 40%. Interest rate futures also contributed, as Greenlight correctly anticipated Fed cuts when others did not. Sovereign debt and foreign currency produced smaller gains, and inflation swaps posted a minor loss.
The letter describes Greenlight's approach of expressing macro views as directly as possible. Owning gold, copper, or interest rates directly, rather than equities, mining companies, or rate-sensitive financials, isolates the fund's exposure to the insight itself, the firm said, rather than to company-specific operations or hedging decisions.
The letter shows the macro book lost 6% over the first nine months of 2026. Long positions subtracted 5.1% from year-to-date performance, while shorts contributed 0.6%. In the third quarter alone, macro detracted 2%, with longs costing 8.5% and shorts offsetting 7.1%.
Greenlight attributed the largest macro loss to a wrong bet that the Federal Reserve would lower rates. The fund said the loss was "a couple of points more than the macro book's total loss this year." When it entered the position, the market expected one to two rate cuts, and Greenlight sized it on the belief that President Trump would appoint a Fed chair who would push for lower rates, with a reasonable worst case of no cuts. As the Fed raised rates and markets priced in further hikes, the fund's losses exceeded its expected worst case. Greenlight said it continued to believe the market had overpriced an adverse outcome, and it cut the position by one-third in the third quarter for risk management. The remaining position extends into next summer, and the fund said it would recover part of the loss if the market is proven wrong about further hikes.
In 2025, most macro investments were profitable. Gold appreciated 64%, and a medium-sized copper position, expressed through options on copper futures, was a "notable winner" as copper prices rose 40%. Interest rate futures also contributed, as Greenlight correctly anticipated Fed cuts when others did not. Sovereign debt and foreign currency produced smaller gains, and inflation swaps posted a minor loss.
The letter describes Greenlight's approach of expressing macro views as directly as possible. Owning gold, copper, or interest rates directly, rather than equities, mining companies, or rate-sensitive financials, isolates the fund's exposure to the insight itself, the firm said, rather than to company-specific operations or hedging decisions.
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