Market Overview

A Look Into David Einhorn's Q4 Letter To Greenlight Investors


David Einhorn's Greenlight Capital released a letter to the fund's shareholders on Tuesday.

Here is a brief summary of some of the notable highlights.

Macy's: 'Math Might Make More Sense'

Shares of Macy's Inc. (NYSE: M) were trading higher by nearly 4 percent early Tuesday afternoon after Greenlight Capital's letter confirmed the fund established a position in the retailer.

Related Link: These Three Stocks Destroyed David Einhorn's 2015

According to the letter, the fund established a position in Macy's at an average price of $45.69. The letter noted that with the stock trading south of $35.00 per share, the "math might make more sense" and shares are "cheap" at 5x EBITDA, 7x equity free cash flow, and less than 9x 2015 EPS.

Mylan: Medium-Term Upside

Greenlight Capital also disclosed a new position in Mylan NV (NASDAQ: MYL), which helped boost the stock higher by more than 1 percent by Tuesday afternoon.

Greenlight Capital pointed out that Mylan's stock has lost 29 percent during the first three quarters of 2015 and over 45 percent from its mid-year highs. However, the stock is expected to benefit over the medium-term from a competitor recall, an announced share repurchase, and board review of corporate governance complaints.

Selling Activity: Small Profits, Small Losses

Greenlight Capital said that a "pending cyclical downtown" prompted the fund to exit its stake in Applied Materials, Inc. (NASDAQ: AMAT) for a "small loss."

A "small profit" was established in Bank of New York Mellon Corp (NYSE: BK) as the market was giving the stock "too much credit for potential earnings leverage to multiple Fed rate hikes."

Greenlight Capital exited its position in London-listed Cairn Energy at £1.54 after initiating a small position in 2012 at £2.72.

After proving to be the top performer in 2014, Micron Technology, Inc. (NASDAQ: MU) was the fund's "biggest loser" in 2015. Nevertheless, the fund exited its position at an average sale price of $22.14 after buying the stock at an average price of $19.93.

Finally, Greenlight Capital covered its short position in ARM Holdings plc (ADR) (NASDAQ: ARMH) as the company proved to be more successful than expected in offsetting its problems by increasing the royalty rate it charged its clients.

Posted-In: David Einhorn Greenlight CapitalNews Hedge Funds General


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