David Einhorn's Greenlight Capital hedge fund took a new stake in Twitter ( NYSE: TWTR ) last month, banking on the odds that the company is likely to prevail in its battle with multibillionaire purported buyer Elon Musk.
In Greenlight's quarterly letter, Einhorn said the fund paid an average $37.24 per share. Musk's deal to acquire Twitter is priced at $54.20 per share; having hit today's session low, Twitter stock ( TWTR ) is down 2.6% to $40.55.
At Greenlight's $37.24 per-share average, "there is a $17 per share of upside if TWTR prevails in court and we believe about $17 per share of downside, if the deal breaks," Einhorn and Greenlight told investors.
"So we are getting 50-50 odds on something that should happen 95%+ of the time," the letter continued.
Friday brought a deadline in Twitter's case against Musk to force him to go through with the deal after he said he was terminating it. The two are set for a five-day trial starting Oct. 17. Musk counter-sued Twitter late Friday with a filing sealed from the public .
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Einhorn's Greenlight takes Twitter stake, expecting Musk deal is probable outcome