David Einhorn's Greenlight Capital is much more active than other value investors. Unlike focused investors like Warren Buffett or Bruce Berkowitz, Greenlight's portfolio is large, with a lot of turnover. Judging from his new stakes in Q4, Einhorn looks to have turned strongly bullish on tech, with the 2 largest new buys in the quarter being ~$200M in Dell (DELL) and ~$135M in Xerox (XRX). Both companies could be viewed as turnaround plays.
Dell is one of the world's largest PC manufacturers but smartphones, tablets and cloud computing represent considerable headwinds for a commodity industry already living on razor-thin margins. Unlike rivals IBM (IBM) and Hewlett-Packard (HPQ), who have successfully moved into service models, Dell is still heavily reliant on PC sales that comprise nearly 70% of revenue. Nevertheless, Dell generates copious free cash flow ($4.5B in last 12 months), which could be what attracts Einhorn to the stock.
Xerox is another turnaround company but unlike Dell, XRX is much further along the transformation route to a service-driven business model. XRX now derives roughly half its revenue from the Services segment. Like Dell, Xerox also has a ton of FCF, averaging about $1.5B annually for the last 6 years. I have written extensively about XRX in the past so readers can read about Xerox in-depth here.
Einhorn entered into 8 other new positions, most of them tech stocks. Delphi Automotive (DLPH), DST Systems (DST) and Liberty Media (LMCA) were the only new buys outside that sector. As one would expect from a value investor, Einhorn seems drawn to beaten down stocks like Research In Motion (RIMM), CA Inc (CA) and Yahoo (YHOO). Small bets in Tessera Technologies (TSRA) and OmniVision Technologies (OVTI) round out Greenlight's new buys in Q4.
Greenlight exited 8 equity positions in Q4, with the largest divestitures being Becton Dickinson (BDX) and CVS Caremark (CVS). The sales raised ~$113M each. Other significant positions exited include Ingram Micro (IM) at $60M, LyondellBassell (LYB) at $53M and Marathon Oil (MRO) at $47M. Unlike the new buys, there doesn't seem to be a sector theme behind the sales.
In terms of existing positions, Greenlight Capital did not make too many big moves in boosting or paring down stakes. Einhorn added and estimated $86M to General Motors (GM) and $61M to Apple (AAPL), which were already 2 of his 3 largest positions. As for reducing positions, Einhorn looks to be exiting Travelers Companies (TRV), selling 78% of his stake to raise ~$200M and Broadridge Financial (BR), selling 85% of the stock to add ~$53M back to the coffers.
Readers can view all of Greenlight Capital s Q4 moves in spreadsheet format.
Additional disclosure: I am short XRX naked puts.