2 Long Ideas From David Einhorn's Top Holdings

Includes: MRVL, STX
by: Equity Bytes

David Einhorn is well known for his shorts. His presentation on Green Mountain Coffee Roasters (NASDAQ:GMCR) at last year's value investing conference created havoc to the company's share price, which has seen over 70% downside since then. More recently he was in the news for his bearish presentation on Chipotle Mexican Grill (NYSE:CMG). In addition to shorts, I believe some of his long ideas are also worth a look. The following is a list of top stocks his fund Greenlight Capital is holding.

Company Name

Shares Held

Apple Inc.



Seagate Technology PLC



General Motors Company (NYSE:GM)


Marvell Technology Group Ltd.



CIGNA Corporation (CI)


Source: 13F filing

I have already discussed my long thesis on General Motors and Cigna in an article on my blog. Among other stocks, I like Seagate and Marvell. Here's my bullish thesis on these stocks.

Seagate Technology

Seagate's shares have posted strong outperformance this year, rising from ~$15 in Jan to a current level of ~$28. With annual estimated EPS of ~$6.79 for current fiscal year, Seagate remains an attractive option for investors. Its diversified portfolio of HDD products for various industries including computer, medical devices, gaming consoles etc. promises strong future ahead. The company benefited from a higher pricing environment resulting from the Thai floods and has given significant dividends to the investors in last 6 quarters. Going forward, I believe the company will continue to reward shareholders. Seagate has a target of buying back ~25% of shares by 2014, which will provide further support to stock going forward. So, even if there is a slowdown in the PC market, I believe this stock can provide good returns.

Marvell Technology

Marvell seems to be in a comfortable position in the long term given technological advances like EPON/GPON, unified TD-SCDMA/WCDMA and TDD/FDD LTE platforms, which will help it gain market share. Its Armada application processor is becoming popular with its integration into Google TV and MS Kinect, which will boost sales going forward. In addition to market share gain, the company will also benefit from decreased pressure on chip pricing after recent consolidation in the HDD space. Western Digital has recently acquired Hitachi's hard drive business and Seagate has acquired Samsung's hard drive business. This sector consolidation from five to three HDD vendors will lead to more rational pricing and decrease price wars.

Marvell's share price will also benefit from share buybacks and increase dividends. The company has $2.1 bn in cash, no debt and a sound business which generates $600-700 million in FCF annually. The company has already reduced its share count by 14% in the past six quarters and has impressive forward yield of 2.70%. At 7.14x forward earnings, I believe the stock is cheap and hence recommend a buy on it.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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