This article is part of a series that provides an ongoing analysis of the changes made to David Einhorn's Greenlight Capital US long stock portfolio on a quarterly basis. It is based on Einhorn's regulatory 13F Form filed on 11/14/2012. Please visit our Tracking David Einhorn's Greenlight Capital Holdings article series for an idea on how his holdings have progressed over the years and our previous update highlighting the fund's moves during Q2 2012.
Greenlight Capital's US long portfolio stood at $6B this quarter. It is about 5% lower than the long portfolio size of $6.37B as of last quarter. The number of holdings also dropped from 42 to 40. The fund added four new holdings but disposed-off six stocks in the quarter. The top five holdings now represent around 40% of the US long portfolio compared to 38% as of Q2 2012. There was only one change among the top five holdings with Microsoft Corporation (MSFT) getting replaced with Cigna Corporation (CI).
Yahoo Inc. (YHOO): YHOO is a 1.34% of the US long portfolio stake purchased this quarter at prices between $14.65 and $16.22. The stock currently trades at $17.89. Einhorn previously acquired a 3M share stake in YHOO in Q4 2011 at prices between $13.53 and $16.71 only to dispose it off the next quarter at prices between $14.42 and $16.28. The activity this quarter indicates a mild bullish bias.
Aecom Technology (ACM), Babcock & Wilcox (BWC), and Knight Capital Group (KCG) NOTES: ACM, BWC, and KCG Notes are very small stakes (well below 1% of the US long portfolio) initiated this quarter. As the positions are really small, they do not indicate a clear bias.
Hess Corp. (HES) and UnitedHealth Group (UNH): These two stakes were established last quarter but were eliminated this quarter. HES stake (~1.5%) was established at prices between $39.95 and $59.55 and disposed-off at prices between $42.30 and $56.06. UNH (~2% stake) traded between $53.99 and $60.26 last quarter and between $51 and $56.35 this quarter. The quick about-turns indicate a clear bearish bias.
CareFusion Corp. (CFN): CFN is a long-term holding that has been in the portfolio since 2009. The position was reduced by ~50% last quarter before the stake elimination this quarter. The stake disposal of this sizable long-term holding indicates a clear bearish bias.
Best Buy (BBY), Compuware Corporation (CPWR), and Expedia Inc. (EXPE): These are small positions (less than 1% of the US long portfolio) that were reduced last quarter and eliminated this quarter. BBY was a significant 3% stake as of Q1 2012, but was reduced by ~85% last quarter. The bulk of the position was established in Q1 2011 at prices between $29.08 and $35.91 and the stake disposal last quarter happened at prices between $18.02 and $23.64. This quarter, the stock traded at prices between $16.93 and $22.20. Einhorn realized losses on this position. CPWR position was reduced by around 75% last quarter at prices between $8.18 and $9.31 before the stake elimination this quarter at prices between $8.63 and $10.22. The original stake was purchased in Q3 2011 at prices between $7.43 and $10.16. The stake elimination indicates a clear bearish bias. The EXPE stake was established in Q1 2012 at prices between $28.63 and $35.44. It was reduced marginally last quarter at prices between $31.18 and $50.05 and was eliminated this quarter at prices between $44.06 and $59.40. Although the stake was small, Einhorn realized solid gains on this position.
Aetna Inc. (AET) & Cigna Corporation : Einhorn has a large (over 12%) position in health care related companies. This quarter, he increased the positions in AET and CI substantially while decreasing three other companies in the same sector: Coventry Health (CVH), Humana Inc. (HIM), and Wellpoint Inc. (WLP). Also, a ~2% position in Unitedhealth Group was eliminated as well. The pattern of trades indicates a clear bullish bias toward AET and CI and a bearish bias toward the other companies. AET is a ~3% position while CI is an over 5% position. AET stake was increased by ~40% this quarter at prices between $35.30 and $40.29. The original stake was purchased in Q2 2012 at prices between $38.77 and $50.23. The stock currently trades at $40.78. CI stake was increased by ~10% this quarter at prices between $39.66 and $47.80. The original stake was purchased in Q2 2012 at prices between $42.58 and $49.43. The stock currently trades at $50.87. For investors attempting to follow Einhorn, these are good candidates for further research.
Biofuel Energy (BIOF): BIOF is a minute stake that was increased marginally this quarter. The minor position and the marginal stake increase do not signify any bias.
Computer Sciences Corporation (CSC), Delphi Automotive PLC (DLPH), DST SYS INC (DST), and Marvell Technology Group (MRVL): These are medium-sized positions (1-4%) increased incrementally this quarter. Einhorn purchased the initial stake in CSC in Q1 2012 at prices between $23.37 and $33.26. The stake was almost doubled this quarter at prices between $22.50 and $34.68. The stock currently trades at around $34. The DLPH stake was established in Q4 2011. The position was marginally decreased last quarter but this quarter shows a marginal increase in the number of shares. The stock currently trades at $31.68. The DST stake was first purchased in Q4 2011 at prices between $41.23 and $50.77. The stock currently trades at around $54.44. It was marginally increased this quarter at prices between $50.11 and $56.65. The original MRVL position was acquired at around $13 in Q3 2011. The position size was increased by over 25% this quarter at prices between $9.16 and $12.28. The stock currently trades well below that range at around $7.50. All for these stocks are good to consider for anyone wishing to follow Einhorn's trades.
General Motors Company (GM): GM is a large ~8% of the US long portfolio stake that was increased by 20% this quarter at prices between $18.80 and $24.80. The original stake was purchased in Q1 2011 at prices between $30.74 and $38.98 with the bulk of the current stake acquired in Q3 2011 at prices between $20.18 and $31.80. The stock currently trades at around $24. For investors attempting to follow Einhorn, GM is a very good option to consider.
Apple Inc. (AAPL): AAPL is Einhorn's largest position accounting for over 12% of the US long portfolio. It is one of Einhorn's biggest winners in recent times with the first purchases made in the high-200s price-range in 2010. The position was reduced by 25% this quarter at prices between $574.88 and $702.10. The stock currently trades at $525. Despite the stake reduction, the large remaining stake indicates a bullish bias.
Seagate Technology (STX): STX is a large 8.5% stake that was reduced by ~28% this quarter at prices between $24.56 and $35.67. The bulk of the stake was purchased in Q2 2011 at an average purchase price of $16.06. The stock currently trades at around $27.
Microsoft Corporation & Sprint Nextel Corporation (S): These were very large stakes (over 5% of the long portfolio) that were reduced significantly this quarter. MSFT position was reduced by ~40% at prices between $26.76 and $32.85 and the S stake was reduced by around two-thirds at prices between $3.19 and $5.70. The large stake reductions indicate a clear bearish bias.
Huntington Ingalls Industries Inc. (HII): HII is a 1.5% stake that was reduced by around 20% this quarter at prices between $38.17 and $42.27. The original stake was purchased in Q2 2011 at prices between $34.50 and $40.98. The stake reduction indicates a mild bearish bias.
Coventry Health Care Inc. , Humana Inc. (HUM), and Wellpoint Inc. : These are medium-sized positions in the healthcare sector that were reduced this quarter despite Einhorn building stakes in two other companies (Aetna and Cigna) in the same sector. The positions were purchased last quarter and so the quick turnaround and the activity indicate a clear bearish bias toward these companies.
The rest of the positions were kept steady during the quarter:
Barrick Gold Corporation (ABX): The ~1.3% of the US long portfolio ABX position was kept steady this quarter although the stake was doubled last quarter at prices between $35.24 and $44.21. The stock currently trades below that range at around $33.27. Einhorn is very bullish on gold and also has large positions in Market Vectors Gold Miners ETF (GDX) and physical gold. The position in ABX signifies a clear bullish bias. For investors attempting to follow Einhorn, ABX is a good position to consider.
Oaktree Capital Group (OAK) and Virgin Media Inc. (VMED): These are small 1-2% of the long portfolio stake each purchased last quarter and kept steady this quarter. The purchases indicate a mild bullish bias. The stocks are trading well above the lows reached in Q2 2012. Investors attempting to follow Einhorn will have to wait for a better entry-point.
Xerox Corporation (XRX): XRX is a ~3% position first purchased at around $7.5 in Q4 2011. The stake was increased by over 70% in Q2 2012 at prices between $6.38 and $7.94. The stock currently trades below those ranges at $6.25. For investors attempting to clone Einhorn's trades, XRX is a very good option to consider.
Chipotle Mexican Grill (CMG) PUT, Genworth Financial Inc. (GNW), Aspen Insurance Holdings (AHL), CBS Corporation (CBS), Einstein Noah (BAGL), Ensco PLC (ESV), Fifth Street Bank (FSC), Legg Mason Inc. (LM), Liberty Media Capital (LMCA), Market Vectors Gold Miner ETF , NCR Corporation (NCR), NVR Corporation (NVR), Republic Awys Hldgs Inc. (RJET), State Bank Financial (STBZ), Symmetricom Inc. (SYMM), and Tessera Technologies (TSRA): These positions remained untouched during the quarter.
The spreadsheet below highlights changes to Greenlight's US stock holdings in Q3 2012: