David Einhorn: The U.S Equity Market Is The Most Expensive We’ve Seen Since We Began Managing Money

Greenlight Capital closed out 2025 with a year that showcased both the strength of macro positioning and the challenges of traditional long-short equity investing. The firm noted that “the Partnerships returned 9.0% in 2025, net of fees and expenses, compared to 17.9% for the S&P 500 index.”

That relative lag hides a more nuanced performance split. As Greenlight explained: “For 2025, we made all our return and alpha in the macro portfolio.” According to their attribution table, “Macro 14.4%” gross contribution drove the result while the long-short book posted muted returns.

The firm’s macro book succeeded by targeting exposures directly rather than indirectly. The letter described the approach succinctly: “When we have a macro insight, the goal is to express it as directly as possible, such that we are most likely to succeed or fail based on the insight itself.”

That choice paid off in commodities and rates as “gold had an exceptional year and appreciated 64%” and “copper prices rose about 40% in 2025,” while interest rate futures also added gains.

By contrast, the long-short book reflected the drag from cyclical exposures. The firm conceded that “a good chunk of the economy is experiencing a cyclical downturn (some might even say a recession).”

In these situations, cyclicals typically re-rate upward as trough earnings compress, but Greenlight noted that “unfortunately, this has not happened to most of our companies. The earnings fell short, and the multiples held steady or even contracted a bit.”

There were, however, individual bright spots. Brighthouse Financial agreed to be acquired, Fluor’s structured exposure to NuScale benefited from monetization, and Victoria’s Secret showed brand repair as “the brand is beginning to recover. The stock, which was all but left for dead, is beginning to reflect the brand’s recovery.”

The short portfolio produced mixed outcomes. While thematic shorts in consumer and housing worked, meme dynamics and cult followings disrupted expected payoffs.

One short “instead became a meme stock,” while another involved a medical devices firm that “achieved revenue growth in 2025 that was a few percent better than expected.”

Looking ahead, Greenlight reiterated valuation concerns: “We believe that the U.S. equity market is the most expensive we’ve seen since we began managing money.”

With daily correlation of “-0.11,” the fund continues to prioritize asymmetric macro exposures and opportunistic equity selection. In a nod to investor psychology, the letter closed with a quote: “You measure the size of the accomplishment by the obstacles you had to overcome to reach your goals.”

You can read the entire letter here:

Greenlight Capital Q4 2025 Letter