The Bull Case for FuboTV and More on the Market From David Einhorn’s Greenlight Capital

“Watching sports goes from being a passive experience to a highly engaging, active one,” Greenlight said in its letter, which was seen by Barron’s. “Higher engagement leads to higher ad revenues and the ability to make other in-app sales to players.”

Greenlight owned shares and warrants at an effective price of $5 per apiece. The company went public in October and shares were trading at $28 by year-end.

The swift jump helped Greenlight’s performance in the fourth quarter, allowing the fund to gain 25%—its best quarterly performance. But for the full year, Greenlight gained 5.2%, lagging behind the 18.4% jump in the S&P 500 and marking another year of relative underperformance. The fund gained 13.8% in 2019, while the S&P 500 popped 31.5%.

Greenlight has notably been bearish on Tesla (TSLA) for years but was able to avoid major losses as the electric-car maker’s stock soared in the back half of 2020.

Greenlight credited some of Tesla’s run-up to “value-indifferent investors.” The cohort includes index funds, which seek only to match the performance of a market benchmark, experienced investors that don’t use valuation in their analysis, and retail investors, who have been empowered by trading apps like Robinhood.

“Many in this group think an ‘expensive’ stock is one that trades at $100 a share and a ‘cheap’ stock is one that trades at $5 a share,” the letter said.

Nevertheless, Greenlight expects that 2021 will be good for value stocks. It said it is betting on “higher inflation, a strong housing market, and rising interest rates.”

Write to Carleton English at [email protected]