Greenlight Capital's David Einhorn told his investors that the hedge fund closed its longstanding "short" position in bond insurer MBIA Inc. in the first quarter.

Einhorn, in an investor letter which was reviewed by Reuters and which an investor said was distributed Wednesday night, called MBIA the "third most profitable short position" in Greenlight's history.

A short is a bet that a stock will fall in price.

Greenlight had been shorting MBIA "in some capacity" since 2002 and rode the stock down from $76 to $2 a share, where it bottomed out in 2009, according to the letter. Shares of MBIA have since rebounded to $15.85.

Shares of MBIA plunged during the financial crisis because the firm had written guarantees on a mortgage backed securities during the housing boom. Einhorn's decision to close out the short bet came a few weeks before Bank of America agreed to pay $1.6 billion to MBIA stemming from a long-running lawsuit over the bond insurer's role in the mortgage-backed securities market.

In the letter, Einhorn also said Greenlight "initiated a long position" in German-based chemical company Evonik Industries AG through a private placement. He said the company has "a high quality portfolio of chemical assets in the U.S., Europe and Asia."

In the first quarter, Einhorn said Apple Inc. was the fund's biggest loser. The other "significant loser" was the firm's short bet on Green Mountain Coffee Roasters, which rose from $41.34 to $56.76 a share.

A short position loses value as a stock rises in price.