David Einhorn’s Greenlight Capital shares on Twitter

Hedge fund Greenlight Capital said it acquired a new stake in Twitter last month as the social media company sued to force Elon Musk to buy the company even after the billionaire businessman said he changed his mind about the deal.

Greenlight founder David Einhorn wrote to investors Monday that his hedge fund has taken over, paying an average of $37.24 per share, according to the letter seen by Reuters.

Twitter shares fell 2.5% to $45.26 on Monday.

“At this price, there is $17 per share to the upside if TWTR prevails in court and we think about $17 per share to the downside, if the deal is broken. So we get a 95% chance of 50-50 for something that should happen + of time.”

Einhorn, whose company gained 8.4% during the second quarter while the S&P500 fell 16%, has a long history with Musk after betting, for years, that electric car maker Tesla’s stock would fall. The two men often quarrel on Twitter.

David Einhorn said his hedge fund paid an average of $37.24 per share.
Reuters
Elon Musk, Twitter logo
Einhorn said he wrote a few years ago, half-jokingly, that “the accepted reality seems to be that Elon Musk is above the law.”
AFP via Getty Images

Now Einhorn is back for a second round with Musk shortly after Twitter in July sued Musk in Chancery Court in Delaware for making him complete the $44 billion acquisition, accusing the billionaire of refusing to honor his Twitter commitments “because the deal no longer served his personal interests.”

Over the years, the court has developed case law relating to merger agreements and “the resulting clear and prior understanding of the purchasers’ contractual obligations has created a great deal of predictability in the field,” Einhorn wrote.

Einhorn argues that the Delaware Court, the most prominent business court in the United States, has reason to compel Musk to complete the purchase. “If you let musk off the hook, it will invite many future buyers to regret remorse.”

Einhorn said he wrote a few years ago, half-jokingly, that “the accepted reality seems to be that Elon Musk is above the law.” In a few months, the Delaware court will issue its verdict.

The letter said a five-day trial was scheduled for October, and Einhorn wrote that he liked the “risk-reward” that would be upheld in the former.

He declined to write about Tesla, something he hasn’t discussed in a letter since 2019.

In general, Einhorn, whose comments about the economy and the stock market have long been widely followed, said, “We still think we’re in a bear market,” and that the company is hoarding cash for future investments.

In the first half of the year, Greenlight gained 13.2% compared to a 20% decline in the S&P500. “We achieved our positive result to date despite being net long in a bear market,” the letter read, noting that undisclosed bets on some stocks were performing well.

Greenlight exited short against CH Robinson Worldwide, after a modest loss, and liquidated a long bet on Rheinmetall after a 125% gain over a few months as the company benefited from German and European defense spending.

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