David Einhorn's Letter Perfumed With Success

I have never been a hedge fund manager, but I would imagine that those end-of-quarter letters can be a genuine joy to write, or an absolute chore, depending on how said quarter went. One has to imagine that, when David Einhorn sat down to rattle through his latest letter, he did so with a smile on his face. In the third quarter, Greenlight initiated new positions in CBS CBS, General Motors GM, and Marvell Technology MRVL. Not one but three major players. Let's not forget that Greenlight already has Apple AAPL, Gold, Market Vectors Gold Miners GDX, Microsoft MSFT and Vodafone VOD on its portfolio. According to Market Folly, “Greenlight likes CBS due to its growing retransmission fees, monetization of their content library, as well as the potential for increased advertising spending by clients. The hedge fund bought CBS at $20.79 per share (less than 10x their estimate of 2012 earnings) and it now trades just north of $25.” As for GM, Greenlight's letter states that “GM is being priced by the market as a cyclical company trading at less than 6x this year's earnings. While some may see it as normal to value cyclicals at low multiples of peak earnings, we believe that 2011 is not a peak and, in fact, is below mid-cycle.” Finally, regarding MRVL, Einhorn and Greenlight are of the opinion that hard disc drives will remain relevant for some time yet. The cherry on the letter-cake is where Einhorn says that Greenlight has sold out of their long potitions in Pfizer PFE and BP BP and covered the short of Amedisys AMED during the quarter. Einhorn will be hoping that he is still smiling when it is time to put the Q4 letter together.