Hedge fund Greenlight Capital said it took a new stake in Twitter last month as the social media company sued Elon Musk to force it to buy the company, while the billionaire entrepreneur said he changed his mind about the deal. Have given.
Greenlight founder David Einhorn wrote to investors on Monday that his hedge fund had taken positions, paying an average of $37.24 for the stock, according to the letter seen by Reuters.
Shares of Twitter fell 2.5% to $45.26 on Monday.
“If TWTR prevails in court, this price rises to $17 per share and if the deal breaks down, we believe there will be a drop to $17 per share. So we get 50-50 odds on something like that.” which should be 95%+ on time,” the letter stated.
Einhorn, whose firm gained 8.4% during the second quarter while the S&P500 index declined 16%, has a long history with Musk betting after years, for years, that electric car maker Tesla’s stock would fall. There is often a fight between the two on Twitter.
Now Einhorn is returning for a second round with Musk, when Twitter sued Musk in Chancery Court in Delaware in July to complete its $44 billion acquisition, honoring its obligations to Twitter on the billionaire. Alleging his refusal to do so “because the deal no longer serves his personal interest.”
Over the years, the court has evolved case law relating to merger agreements and “resulting in precedent and clear understanding of buyers’ contractual obligations has predated much in this area,” Einhorn wrote.
Einhorn argues that the Delaware Court, the foremost commercial court in the United States, has reason to compel Musk to complete the purchase. “If this lets Musk off the hook, it will invite a suit of remorse from many future buyers.”
Einhorn said he half-jokingly wrote a few years ago that “the accepted reality appears to be that Elon Musk is above the law.” In a few months, the Delaware Court will rule.
The letter said a five-day trial is scheduled for October and Einhorn wrote that he liked the “risk-reward” precedent that would be set.
He declined to write about Tesla, which he has not discussed in a letter from 2019.
In general, Einhorn, whose announcements on the economy and the stock market have long been widely followed, said, “We believe we are in a bear market,” and that the firm is looking to invest in the future. Depositing cash.
In the first half of the year, Greenlight gained 13.2%, compared to a 20% decline in the S&P 500 index. “Despite a prolonged net in the bear market, we achieved our positive year-over-year results,” the letter said, noting that undisclosed bets on some stocks performed well.
Greenlight exited a short position against CH Robinson Worldwide after a minor loss, and ended a long bet on Rheinmetall after a 125% gain in a few months as the company benefited from German and European defense spending.