How David Einhorn's DME Capital Outperformed the Market in Early 2025 Despite Q1 Headwinds

The opening quarter of 2025 presented significant challenges for equity investors. The S&P 500 experienced a decline of approximately 4.6% through March 31, weighed down by valuation concerns and mounting tariff uncertainties that would intensify further in April. Yet in this turbulent environment, billionaire investor David Einhorn’s fund—now operating as DME Capital Management—delivered a notably different outcome, generating an 8.2% return according to Bloomberg reporting.

In correspondence with fund stakeholders, Einhorn outlined a strategic shift in February as concerns regarding the Trump administration’s policy direction mounted. The portfolio pivoted toward defensive positioning, including significant allocation to gold and several short positions against undisclosed consumer-focused enterprises. This tactical repositioning appears to have paid dividends amid broader market volatility.

Understanding the Fund’s Strategic Holdings at Year-End 2024

At the close of 2024, Einhorn’s operation held 36 equity positions with an aggregate valuation near $1.95 billion. The composition of these holdings reveals a concentrated bet on several compelling investment theses across different sectors.

Green Brick Partners: The Cornerstone Position (28% Allocation)

The fund’s most substantial commitment centers on Green Brick Partners (NYSE: GRBK), a homebuilder in which David Einhorn played a founding role. The origin story traces back to the 2008 financial crisis when Einhorn partnered with seasoned real estate operator Jim Brickman to establish JBGL, a real estate investment vehicle focused on acquiring distressed land assets and supporting troubled builders with capital.

When housing conditions stabilized around 2013, JBGL executed a reverse merger in 2014, emerging as Green Brick. The company’s differentiated model emphasizes direct land ownership—a competitive advantage not universal among homebuilders. By the end of 2024, Green Brick controlled or owned over 37,800 individual lots, predominantly positioned in high-growth jurisdictions such as Texas, Florida, and Georgia.

The business has demonstrated formidable operational execution. The fourth quarter saw the company deliver 1,019 unit closings—a company record. Over the five-year stretch since 2020, earnings have compounded at 39% annually while maintaining robust returns on both assets and shareholder equity. The equity appreciated more than 700% over the preceding five years and currently commands just 7x forward earnings—a valuation that seems reasonable given the growth trajectory.

Trade policy uncertainty and potential material cost inflation present near-term risks, though management’s operational sophistication and the company’s land-light model offer meaningful flexibility. Given these dynamics, the stock appears positioned for continued appreciation.

Core Natural Resources: Coal Sector Exposure (7.7% Allocation)

The second-largest position reflects David Einhorn’s stakes in the coal industry through Core Natural Resources (NYSE: CNR). This entity emerged from the merger of CONSOL Energy and Arch Resources, which closed in early 2025. The combined operation manages 11 mining facilities across the United States, spanning both metallurgical coal production for steel manufacturing and thermal coal for electricity generation.

Geographic diversification extends beyond domestic borders. In 2024, international customers accounted for over 10% of revenue from both China and India individually. This global exposure has become a double-edged sword. Chinese tariff policies imposing 15% import duties on coal have catalyzed a sharp market reaction, with shares declining approximately 32% year-to-date.

Long-term structural headwinds surrounding coal adoption remain, and the current administration’s stance on climate initiatives introduces policy uncertainty. Nevertheless, the company maintains consistent profitability spanning the last three years and trades at merely 8x forward earnings. The question for investors hinges on whether the world’s energy transition moves as rapidly as some anticipate or whether coal retains a longer runway in the global energy mix.

Brighthouse Financial: The Acquisition Play (7% Allocation)

Brighthouse Financial (NASDAQ: BHF), a substantial annuity and life insurance provider, represents the third major position. Interestingly, the stock has appreciated roughly 9% year-to-date, potentially reflecting market recognition of latent value.

The investment thesis appears speculative, centering on takeover potential. Throughout 2024, Brighthouse faced challenges in achieving its risk-based capital (RBC) ratio target of 400%-450%, the benchmark most institutional investors consider appropriate for insurers. As 2025 began, market speculation intensified regarding potential asset sales or business disposition. In March, equity analysts issued bullish recommendations predicated on the notion that a strategic transaction—whether a full or partial sale—could crystallize substantial shareholder returns.

This position carries inherent execution risk. Acquisition-oriented theses depend on events transpiring as theorized, which introduces vulnerability. However, successful outcomes in such scenarios can generate outsized returns. As a portfolio component, this stake likely benefits from smaller sizing rather than concentrated conviction.

The Broader Market Context

David Einhorn’s outperformance against the S&P 500 underscores the value of tactical flexibility and thematic conviction during choppy market environments. Whether through traditional positioning in real estate fundamentals, contrarian bets on cyclical sectors, or speculative merger arbitrage, the portfolio construction reflects a differentiated approach to navigating 2025’s economic crosscurrents.