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Summary

  • David Einhorn's US long portfolio stood at $6.68B this quarter, down 8% form $7.29B last quarter.
  • Greenlight's long/short ratio remained almost steady at 120% long and 71% short.
  • Greenlight is bullish on Sunedison Inc. and Conn's Inc. They are bearish on General Motors.

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 05/16/2014. 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 Q4 2013.

Greenlight Capital's US long portfolio stood at $6.68B this quarter. It is down about 8% compared to $7.29B as of last quarter: the long/short ratio shifted only marginally during the quarter - 120% long and 71% short as of Q1 2014 compared to 125% long and 70% short as of Q4 2013. The number of holdings in the portfolio increased from 38 to 41. The top five holdings represent ~51% of the US long portfolio compared to the ~56% as of last quarter.

Einhorn's Q1 2014 letter reported that the fund returned (1.5%) in Q1 2014 - it returned 19.1% in 2013 net-of-fees - in a constantly rising bull-market, the fund is not expected to keep pace with the market, but the long-term performance of his absolute-returns strategy speaks for itself: 19.5% annualized returns (net of fees and expenses) since inception in 1996. To learn about David Einhorn and the perils of shorting, check-out his "Fooling Some of the People All of the Time, A Long Short (and Now Complete) Story". In addition to partner stakes, the fund also invests the float of Greenlight Capital RE (NASDAQ:GLRE).

New Stakes:

Conn's Inc. (NASDAQ:CONN): CONN is a 1.92% of the US long portfolio position established this quarter at an average purchase price of $35.49. The stock currently trades at $42.11. The specialty retailer fell ~50% in February after announcing increased credit losses. Einhorn purchased the shares on the thesis that the market has over-reacted. For investors attempting to follow Einhorn, CONN is a good option to consider for further research.

American Capital Agency (NASDAQ:AGNC), National-Oilwell Varco (NYSE:NOV), & Lam Research (NASDAQ:LRCX): These are 1 to 2% of the US long portfolio positions established this quarter. The 1.69% AGNC stake was purchased at prices between $19.29 and $22.66 and the stock currently trades at $23.19. NOV is a 1.43% of the US long portfolio position purchased at prices between $73 and $80 compared to the current price of $81.63. LRCX is a smaller 1% stake purchased at prices between $48.58 and $56.59 and the stock currently trades at $58.52.

Lorillard Inc. (NYSE:LO) PUTS: LO PUTS are a brand new short position established this quarter when the share price varied between $47.31 and $55.26. The stock currently trades at $57.61. The nominal value of the stake is at ~1% of the US long portfolio.

Stake Disposals:

General Motors Company (NYSE:GM): GM was Greenlight's third-largest position at 9.55% of the US long portfolio as of last quarter. The stake was disposed of this quarter at an average exit price of $35.76 compared to an average entry price of $23.87. The stock currently trades at $34. Greenlight expected 2014 to be a break-out earnings year but the guidance disappointed and that resulted in the exit decision.

NCR Corporation (NYSE:NCR): NCR was a 1.71% position as of last quarter. It was reduced by half last quarter at prices between $32 and $41.56. Q3 2013 also saw a ~20% stake reduction at prices between $32.90 and $40. The stock currently trades at $32.26. NCR was first purchased in 2010 at much lower prices and Einhorn harvested the long-term gains. He has disclosed that his average entry price on NCR was $14.85 compared to an average exit price of $30.56 for an IRR of 32% between 2010 and 2013.

Delphi Automotive PLC (NYSE:DLPH): DLPH was a 1.98% of the US long portfolio stake that was established in 2011 prior to the IPO. It was reduced by 25% in Q1 2013 at prices between $37.50 and $44.50. In Q2 2013, it was reduced again by another 45% at prices between $40.94 and $52.09. Last quarter saw a ~28% stake reduction at prices between $54 and $60 before the stake elimination this quarter. The stock currently trades at $66. Greenlight's DLPH performance disclosure indicates that his average entry price was $20.18 and the average exit price was $50.28.

DST SYS INC (NYSE:DST) and Legg Mason Inc. (NYSE:LM): These are small positions (less than ~1.5% of the US long portfolio each) that were reduced last quarter and eliminated this quarter. On DST, Einhorn has disclosed that his average entry price was $51.52 and average exit price was $84.08. He also indicated that the exit decision was based on the fact that the share price had reached his sum of the parts valuation number.

Stake Increases:

Sunedison Inc. (NYSE:SUNE): The very small 0.23% of the US long portfolio position in SUNE established last quarter was increased to a fairly large 3.34% position this quarter at an average entry price of $15.55. SUNE is expected to spin-off its semiconductor business in an IPO this month. Greenlight's buy thesis is based on their expectation that the profitable solar projects business would also be spun off later this year in an IPO - his sum-of-parts valuation for SUNE is at ~$35 per share compared to the current price of $17.30.

Anadarko Petroleum (NYSE:APC) & BP PLC (NYSE:BP): APC is a 2.83% of the US long portfolio position purchased last quarter at an average cost-basis of $78.55. It was increased by ~22% this quarter at prices between $78 and $87. The stock currently trades at $99. BP is a 1.07% of the US long portfolio position purchased last quarter at an average cost-basis of $47.39. The position was increased by just over 50% this quarter at prices between $46 and $51. The stock currently trades at $51.30.

Spirit Aerosystems (NYSE:SPR): SPR is a 1.36% position that has seen consistent buying since the stake establishment in Q1 2013. The position was increased by just over 40% last quarter at prices between $21.50 and $26 and another 20% this quarter at prices between $26.51 and $35.89. The stock currently trades at $32.40. The activity indicates a clear bullish bias.

URS Corporation (NYSE:URS): The 1.35% URS stake established in Q2 2013 at prices between $43 and $50 was increased by ~16% last quarter at prices between $50 and $55. This quarter saw a ~50% stake increase at prices between $42.51 and $53.28. The stock currently trades at $43.61. Einhorn is bullish on URS. For investors attempting to follow Einhorn, URS is a good option to consider for further research.

EMC Corporation (NYSE:EMC): EMC was doubled this quarter at prices between $23.66 and $28.18 to a 2.42% of the US long portfolio position. The original position was established last quarter at around $24 per share. The stock currently trades at $26.25.

Chico's FAS (NYSE:CHS), McDermott Intl. (NYSE:MDR), and Take-Two Interactive (NASDAQ:TTWO): These small positions (less than ~1% of the US long portfolio each) established last quarter were increased significantly this quarter. CHS is still a very small stake at 0.63% of the US long portfolio. The MDR stake was increased by ~80% this quarter at prices between $7.37 and $9.18 and the stock currently trades at $7. The TTWO position was increased by ~15% this quarter at prices between $16.88 and $22.26 and the stock currently trades at $19. MDR and TTWO stakes now stand at 1.64% and 1.58% of the US long portfolio respectively.

Stake Decreases:

Apple Inc. (NASDAQ:AAPL) and CALLs, Micron Technology (NASDAQ:MU), & Marvell Technology Group (NASDAQ:MRVL): AAPL, MU, and MRVL are Einhorn's largest three positions at 16.71%, 15.59%, and 9.30% of the US long portfolio respectively. The AAPL position was first purchased in the high-200s price-range in 2010. It was reduced by 25% in Q3 2012 at prices between $574.88 and $702.10 but upped by 45% in Q4 2012 at prices between $509 and $671. In Q1 2013, the position was again increased by around 50% at prices between $420 and $550 and had since been kept steady. This quarter saw a ~13% stake reduction at prices between $500 and $561 and the stock currently trades at around $598. MU stake was purchased last quarter at an average cost-basis of $16.49. This quarter saw an 8% trimming at prices between $20.67 and $25.49 and the stock currently trades at $26. Einhorn's average cost-basis on MRVL is around $11. The stock currently trades at $15.33. This quarter saw a 11% trimming at around $15 per share. Einhorn is starting to realize large gains from these positions.

Aetna Inc. (NYSE:AET): AET was a top-five position as of Q3 2013. Last quarter, the position was reduced by ~23% at prices between $60.75 and $69. This quarter saw a 25% stake reduction at prices between $65 and $76 and the position currently stands at a still significant 3.61% of the US long portfolio. The original position was established in Q2 2012 at prices between $38.50 and $50. The stock currently trades at $74.36. The substantial stake reduction of a large position indicates a bearish bias.

Babcock & Wilcox (NYSE:BWC): BWC is a 1.90% of the US long portfolio position established in Q3 & Q4 2012 at prices between $23.37 and $27 and had since been kept relatively steady. The stock currently trades at $32. This quarter saw minor trimming.

Computer Sciences Corporation (NYSE:CSC): Einhorn purchased the initial stake in CSC in Q1 2012 at prices between $23.37 and $33.26. The stake was almost doubled in Q3 2012 at prices between $22.50 and $34.68 and by an additional ~12% in Q4 2012 at prices between $30 and $41. The last five quarters saw a combined stake reduction of ~60% at prices between $43 and $64. The stock currently trades at $61.

IAC Interactive (NASDAQ:IACI): IACI was a minute 0.30% of the US long portfolio position established in Q1 2013. In Q2 2013, the position was substantially increased to a 1.74% position at prices between $43.50 and $51.50. Last quarter saw a 6.5% stake increase at prices between $53 and $69. The position was reduced by 28% this quarter at prices between $65 and $80. The stock currently trades at $62.81 and accounts for 1.46% of the US long portfolio.

ING US (NYSE:VOYA): The 2.19% VOYA position was established in Q2 2013 at an average cost-basis of $20.29. This quarter saw a ~5% trimming at prices between $33 and $37. The stock currently trades at $34.46.

Market Vectors Gold Miner ETF (NYSEARCA:GDX): The 3.06% GDX position was increased by ~47% to a 4.04% position in Q2 2013 at prices between $23.42 and $35.06. The stock currently trades right at the low end of that range at $23.42. This quarter saw minor trimming. Einhorn is holding on against falling prices. He also has previously disclosed a large holding in physical gold.

Intrexon Corporation (NYSE:XON), Rite Aid Corporation (NYSE:RAD), Aspen Insurance Holdings (NYSE:AHL), and Vodafone Group PLC (NASDAQ:VOD): These are small positions (less than ~1.5% of the US long portfolio each) that were reduced this quarter. As the position sizes are small, the activity does not indicate a change in bias.

Kept Steady:

Cigna Corporation (NYSE:CI): CI is a top-five position (5.28% of the portfolio) that saw significant stake reductions last year: Q4 2013 saw a ~10% trimming at prices between $73 and $88 and Q2 2013 saw a ~40% stake reduction at prices between $62.50 and $72.50. The original position was established in Q2 2012 at prices between $43 and $50. The stock currently trades at $87.49.

Oil States International (NYSE:OIS): OIS is a 4.06% of the US long portfolio stake established in Q1 2013 at an average purchase price of $77.16. The stock currently trades at $97.53. In the Ira Sohn conference in May 2013, Einhorn highlighted this position saying the shares could be worth as high as $155 per share, if the accommodation business it owns is spun-off as an REIT.

Liberty Global Class A & Class C (NASDAQ:LBTYA) (NASDAQ:LBTYK): Liberty Global position accounts for 2.68% of the US long portfolio. Einhorn had a position in Virgin Media (NASDAQ:VMED) from Q2 2012 onwards and the Liberty Global position was established as a result of the acquisition of VMED by Liberty Global. The VMED position roughly doubled in around twelve months of ownership. This quarter, the net position remained steady although the LBTYA position was reduced and LBTYK increased (after stock splits in March 2014).

Einstein Noah (NASDAQ:BAGL): BAGL is a very long-term holding that was kept steady since 2009. About 14% of the position was sold at $15.51 (1.5M shares) through a secondary underwriting in August 2013. Last quarter saw another ~27% stake reduction at prices between $14.50 and $18.11. The remaining position accounts for 1.66% of the US long portfolio. The stock currently trades at $15.40.

Amdocs (NASDAQ:DOX): The 1.60% DOX position was established in Q2 2013 at prices between $34 and $37. It was increased by just over 50% last quarter at prices between $40 and $45. The stock currently trades at $47.

Tempur Sealy International (NYSE:TPX): TPX is a 1.33% position established in Q3 2013 at prices between $36 and $47 and increased by ~57% last quarter at prices between $38 and $51. The stock currently trades at $54.

Other very small positions (less than 0.5% of the US long portfolio) include Biofuel Energy (NASDAQ:BIOF), Blackhawk Network (NASDAQ:HAWK), Fifth Street Finance (NASDAQ:FSC), Hatteras Financial (NYSE:HTS), Nokia Corporation (NYSE:NOK), Penn National Gaming (NASDAQ:PENN), and Talmer Bancorp (NASDAQ:TLMR).

Per Greenlight's Q1 2014 letter, they realized losses in the following US listed short positions this quarter: Chipotle Mexican Grill (NYSE:CMG) for a (33%) IRR and Michael Kors Holdings (NYSE:KORS) for a stunning (114%) IRR. The partnership also has unrealized losses on a large short position in Keurig Green Mountain (NASDAQ:GMCR).

The spreadsheet below highlights changes to Greenlight's US stock holdings in Q1 2014:

(click to enlarge)

Source: Tracking David Einhorn's Portfolio - Q1 2014 Update