David Einhorn says the market will become even more expensive after the election

Hedge fund investor David Einhorn’s cautious stance throughout the year hurt his performance as he navigated what he believes is the most expensive stock market of his career at Greenlight Capital.

Einhorn’s hedge fund returned just 9% in 2024 through the end of the third quarter, after fees and expenses. That compares with the more than 20% gain of the S&P 500 in the same period.

The high-profile investor said he is not calling the market a bubble nor is he outright bearish, but that skyrocketing prices meant he was positioned conservatively.

“The market is not only making all-time highs. It is, in many ways, the most expensive stock market we have seen since Greenlight’s inception,” Einhorn said in the latest investor letter last month. Einhorn founded Greenlight in 1996.

Einhorn speaks CNBC’s Delivering Alpha Investor Summit Wednesday in New York City. It will be the first chance for investors to hear from Einhorn after the election and whether his views on stock valuations and inflation have changed due to the coming policies of Trump and the Republicans.

After a buyers’ strike in late 2023, Einhorn returned to the market looking for opportunities, acquiring mid-market positions in names like software company Alight and drugmaker Viatris. Investors will be interested to hear if he still finds values.

Last month, he made a bullish case for Peloton, saying the stock is significantly undervalued.

However, these new stock picks didn’t necessarily create much alpha. Greenlight has been hit this year by its low net exposure to the market and a lack of investments in the red-hot Magnificent 7 names.

“We will likely continue to underperform in a rising market, as we have done all year, but we do not want to position ourselves to lose money if the market continues to rise,” he said in the letter. “We think Paul Tudor Jones is right when he says that managing the last third of a major bull or bear market move is often the hardest part.”

Meanwhile, he spent most of this year calling for a renewed acceleration in inflation, making gold a very large position in his portfolio. This bet has done relatively well even as inflation has eased, with spot gold hitting a record high in late October, up 27% this year.

Einhorn, a 55-year-old Cornell graduate, founded Greenlight Capital nearly three decades ago and generated a whopping 26% annualized return over the next decade, far outpacing the broader market and many industry peers. He then thrived during the financial crisis and predicted the fall of Lehman Brothers. His stellar track record made him one of the most followed hedge fund managers on Wall Street. In recent years, he has had some success buying value stocks with buyback strategies.