David Einhorn founded Greenlight Capital in 1996. He is believed to be one of the most successful long/short equity hedge fund managers of the past decade. Greenlight Capital has realized annualized returns of 21.5% since its inception. In 2010, the hedge fund returned 15.9%. His expertise in the hedge fund business can be owed to Gary Siegler and Peter Collery. Prior to launching Greenlight Capital, he worked at Siegler and Collery’s hedge fund called the SC Fundamental Value Fund. Curtis Macnguyen, the founder of Ivory Capital, is also a former employee of SC Fundamental Value Fund. We believe there are intriguing similarities between Macnguyen's and Einhorn’s portfolios.
During the second quarter of 2011, Einhorn sold off CIT Group (CIT), Cardinal Health (CAH), Yahoo (YHOO), Xerox (XRX), MI Developments (MIM), Transatlantic Holdings (TRH), and MDC Holdings (MDC). The timing was right. Since the end of June, Xerox Corp lost 21%, CIT Group and MDC lost 23%. Yahoo and MIM lost 10%, and Cardinal Health lost 8%. Moreover, Einhorn reduced his stake in BP Plc (BP) by 26%, SemGrop (SEMG) by 39%, Amdocs (DOX) by 53%, and Employers Holdings (EIG) by 58%. All of the reduced stocks failed to gain in price since June. Here are Einhorn’s top stock picks at the end of June.
Company | Ticker | Value (x1000) | Activity | Return Since June |
PFIZER INC | 483155 | -6% | -10% | |
MICROSOFT CORP | 385295 | 63% | -2% | |
APPLE INC | 361685 | 29% | 14% | |
SPRINT NEXTEL | 301300 | 0% | -35% | |
CAREFUSION CORP | 258787 | -5% | -6% | |
TRAVELERS | 245092 | 0% | -10% | |
ENSCO PLC | 225118 | -4% | -11% | |
BEST BUY INC | 216340 | 15% | -22% | |
BECTON DICKINSON | 200913 | 0% | -6% | |
GOLD MINER ETF | 193630 | 0% | 12% | |
SEAGATE TECHNOLOGY | 185927 | 252% | -25% | |
NCR CORP NEW | 177857 | -8% | -7% | |
EINSTEIN NOAH REST | 160680 | 0% | -6% | |
CVS CAREMARK | 123075 | 0% | -9% | |
BP PLC | BP | 109271 | -26% | -5% |
ASPEN INSURANCE | 106522 | 0% | 1% | |
GENERAL MTRS CO | 103832 | 0% | -13% | |
HCA HOLDINGS INC | 96855 | 0% | -32% | |
NVR INC | 89960 | 0% | -15% | |
HUNTINGTON INGALLS | 82456 | NEW | -17% | |
LYONDELLBASELL | 80306 | -10% | -11% | |
MARATHON OIL CORP | 76528 | NEW | -13% | |
INGRAM MICRO | 68025 | 48% | -3% | |
BROADRIDGE FINL SOL | 63785 | 0% | -11% | |
AEROPOSTALE | 60102 | NEW | -31% | |
FIRST SOLAR Puts | 37948 | 0% | -20% | |
STATE BK FINL CORP | 34377 | NEW | -12% | |
SEMGROUP CORP | SEMG | 27779 | -39% | -16% |
ENERGY PARTNERS | 25762 | 0% | -9% | |
FIFTH STREET FINANCE | 23185 | -6% | -14% | |
REPUBLIC AWYS | 18634 | 0% | -35% | |
EMPLOYERS HOLDINGS | 16360 | -58% | -25% | |
BIOFUEL ENERGY | 11139 | 0% | -22% | |
SYMMETRICOM | 9968 | 0% | -11% | |
FURIEX PHARMA | 8717 | 0% | -6% | |
AMDOCS LTD | DOX | 7208 | -53% | -8% |
BECTON DICKINSON Calls | 2585 | 0% | -6% |
During the second quarter, Einhorn increased Seagate Technology by 252%. He had 11.5 million shares of the company which was worth $185 million at the end of June. STX lost 25% since then. Andreas Halvorsen’s Viking Global purchased STX in the second quarter as well. Halvorsen owns 20 million shares of the company.
Einhorn added Huntington Ingalls to Greenlight’s 13F portfolio in the second quarter. He purchased 2 million shares at an average price of 37.92. HII lost 17% since the end of June. Another investor who purchased Huntington Ingalls is Jean-Marie Eveillard, the founder of First Eagle Investment Management.
Apple is the third largest holding of Einhorn. During the second quarter, Einhorn increased Apple by 29%. Currently he owns $361 million worth of AAPL shares. Since June, Apple has gained 14%. Ken Heebner’s Capital Growth Management sold off Apple in the second quarter of 2011. Apple is one of the most favorite stocks among hedge funds.
Einhorn has been concerned about the economy for a while and investing defensively. His net exposure was below 30% before the recent stock market declines. We like Einhorn and believe that investors can beat the market in the long run by imitating his top stock picks.
Disclosure: I am long MSFT.
