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 (NASDAQ:DELL) and ~$135M in Xerox (NYSE: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 (NYSE:IBM) and Hewlett-Packard (NYSE: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 (NYSE:DLPH), DST Systems (NYSE:DST) and Liberty Media (NASDAQ: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 (NASDAQ:CA) and Yahoo (NASDAQ:YHOO). Small bets in Tessera Technologies (NASDAQ:TSRA) and OmniVision Technologies (NASDAQ:OVTI) round out Greenlight's new buys in Q4.
Greenlight exited 8 equity positions in Q4, with the largest divestitures being Becton Dickinson (NYSE:BDX) and CVS Caremark (NYSE:CVS). The sales raised ~$113M each. Other significant positions exited include Ingram Micro (NYSE:IM) at $60M, LyondellBassell (NYSE:LYB) at $53M and Marathon Oil (NYSE: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 (NYSE:GM) and $61M to Apple (NASDAQ:AAPL), which were already 2 of his 3 largest positions. As for reducing positions, Einhorn looks to be exiting Travelers Companies (NYSE:TRV), selling 78% of his stake to raise ~$200M and Broadridge Financial (NYSE: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.