Renowned hedge fund manager
just reported his third quarter portfolio. Einhorn made him fame
with a few high profiled shorts that worked out nicely for him.
Most recently he shorted
Chipotle Mexican Grill
Green Mountain Coffee Roasters.
When the news broke out, both stocks were hammered. This is the
third quarter portfolio of
. He bought into new positions in Computer Sciences Corporation,
Yahoo, Babcock & Wilcox Co, and Aecom Technology. He also
added to his positions in HMOS such as Aetna Inc, Cigna Corp.
Among his sales, the most notable ones are Apple (
) and Best Buy (
) He reduced his position in Apple by 25%, although it is still
his largest position. He dumped Best Buy completely.
David Einhorn wrote very favorably about Apple in May. But
apparently the price appreciation or the recent business
development at Apple has changed some of his views. This was what
he wrote back in May:
None of our long portfolio investments have recovered with as
much fanfare as AAPL, which surged from $405 to $600 per share in
the quarter, bringing its P/E back to where it was at the end of
2010. Yet not everyone agrees that AAPL's stock price is merely
playing catch-up to its fundamentals. Some see the stock surge as
a bubble, while others go so far as to mock that AAPL is its own
asset class.Here are some of the common concerns we have heard:
1.Too many hedge funds own AAPL.
2. If AAPL's share price doubles, it will have a $1 trillion
market capitalization, and everyone knows there can be no such
thing as a $1 trillion company.
3. Motorola, Research in Motion and Nokia were all market leaders
that proved unable to hold onto their dominant positions and
healthy margins; this too will be AAPL's fate.
4. AAPL can't possibly maintain its current hyper-growth
Let's address these one at a time:
1.Too many funds. It's not clear what the objection is here. We
suppose the worry is that there is a herd mentality among hedge
funds, and that when one fund sells, there could be a cascade of
hedge funds selling shares and the stock price will
collapse.Moreover, if everyone already owns AAPL, who is left to
buy it? Collectively, hedge funds currently hold less than 5% of
AAPL's outstanding shares, and no hedge fund ranks among the top
40 holders of the stock. The average hedge fund has less than 2%
of its equity assets in AAPL versus AAPL's 4% weighting in the
S&P 500, which means hedge funds are actually underweight
2. A trillion dollars? We've scoured the Nasdaq listing rules,
reviewed the Securities Exchange Act of 1934, and engaged a
leading numerologist. We can't find any prohibition on trillion
dollar market capitalizations.
3. All empires must fall. This concern, while not as arbitrary as
the first two, reinforces our belief that the skeptics have a
fundamental misunderstanding of AAPL. Their view suggests that
AAPL is a hardware company. We disagree.
4. Growing pains. AAPL shares are not priced for growth. Its
current valuation is justified without it.
The latter two concerns merit further discussion. Despite its
size, AAPL remains one of the most misunderstood stocks in the
market. AAPL is a software company. The value comes from iOS, the
App store, iTunes and iCloud. A Motorola RAZR phone was a
one-time winner because when someone else made a phone that was
just a little better, RAZR sales stopped. In contrast, a consumer
with one AAPL product tends to want more AAPL products. Once the
user has a second device, AAPL has captured the customer. At that
point, a future competitor has to make a product that isn't just
a little better, but a lot better to get people to switch. The
high switching cost makes AAPL's business much more defensible
than that of its predecessors.
Further, AAPL's ability to consistently offer innovative features
(as opposed to marginal improvements on the current features)
encourages users to upgrade every couple of years.This provides a
recurring revenue stream. And because AAPL embeds its software
into itshardware, it doesn't face Microsoft's piracy problem. If
the Chinese want AAPL, they haveto buy AAPL. Rather than view
AAPL as a hardware company, we see it as a software company that
monetizes its value through the repeated sales of high margin
We continue to hold AAPL. Not only do we think the skeptics are
misguided, we believe the shares remain cheap. AAPL trades at a
lower multiple than the average company in the S&P500. A
below-market multiple implies that this is a below-average
company. We have a hard time seeing how anyone ranks AAPL as
As of 09/30/2012, Einhorn's firm Greenlight Capital owns 39
stocks with a total value of $6 billion. These are the details of
the buys and sells.
This is the portfolio chart of David Einhorn. You can click on
the legend of the chart to show/hide buys, sells, or holdings.
Each ball on the chart represents a position in the portfolio.
You can move your mouse on the balls to see the details of each
position and click to see the details of all guru trades with
- New Purchases:
- Added Positions:
- Reduced Positions:
- Sold Out:
For the details of David Einhorn's stock buys and sells, go to
This is the sector weightings of his portfolio:
These are the top 5 holdings of David Einhorn
Oil & Gas
New Purchase: Yahoo! Inc (
- Apple Inc (
) - 1,090,890 shares, 12.2% of the total portfolio. Shares
reduced by 25%
- Seagate Technology PLC (
) - 16,588,140 shares, 8.6% of the total portfolio. Shares
reduced by 28.5%
- General Motors Co (
) - 21,582,063 shares, 8.2% of the total portfolio. Shares
added by 23.84%
- Cigna Corp (
) - 7,101,800 shares, 5.6% of the total portfolio. Shares added
- Market Vectors Etf Trust (
) - 6,004,971 shares, 5.4% of the total portfolio.
David Einhorn initiated holdings in Yahoo! Inc. His purchase
prices were between $14.65 and $16.23, with an estimated average
price of $15.6. The impact to his portfolio due to this purchase
was 1.3%. His holdings were 5,050,000 shares as of 09/30/2012.
Yahoo! Inc. is a global Internet communications, commerce and
media company that offers a comprehensive branded network of
services. Yahoo! Inc has a market cap of $20.46 billion; its
shares were traded at around $17.84 with a P/E ratio of 15.6 and
P/S ratio of 4.1.
New Purchase: Babcock & Wilcox Co (
David Einhorn initiated holdings in Babcock & Wilcox Co. His
purchase prices were between $24.01 and $26.99, with an estimated
average price of $25.32. The impact to his portfolio due to this
purchase was 0.37%. His holdings were 860,446 shares as of
09/30/2012. The Babcock & Wilcox Company delivers advanced
engineering, manufacturing and construction solutions to meet
global energy demands. Babcock & Wilcox Co has a market cap
of $2.78 billion; its shares were traded at around $23.71 with a
P/E ratio of 13.6 and P/S ratio of 0.9.
New Purchase: Aecom Technology Corporation (
David Einhorn initiated holdings in Aecom Technology Corporation.
His purchase prices were between $15.29 and $21.62, with an
estimated average price of $18.35. The impact to his portfolio
due to this purchase was 0.28%. His holdings were 782,704 shares
as of 09/30/2012. AECOM Technology Corporation is a global
provider of professional technical and management support
services to a broad range of markets, including transportation,
facilities, environmental and energy. Aecom Technology
Corporation has a market cap of $2.47 billion; its shares were
traded at around $19.32 with a P/E ratio of 9.8 and P/S ratio of
Sold Out: Unitedhealth Group Inc (
David Einhorn sold out his holdings in Unitedhealth Group Inc.
His sale prices were between $51.07 and $58.48, with an estimated
average price of $54.21. UnitedHealth Group Inc. offers health
care coverage and related services to help people achieve
improved health and well-being through all stages of life.
Unitedhealth Group Inc has a market cap of $54.64 billion; its
shares were traded at around $51.29 with a P/E ratio of 10.1 and
P/S ratio of 0.5. The dividend yield of Unitedhealth Group Inc
stocks is 1.6%. Unitedhealth Group Inc had an annual average
earnings growth of 18.2% over the past 10 years. GuruFocus rated
Unitedhealth Group Inc the business predictability rank of
Sold Out: Carefusion Corp (
David Einhorn sold out his holdings in Carefusion Corp. His sale
prices were between $24.01 and $28.63, with an estimated average
price of $26.09. CareFusion is a global corporation serving the
health care industry with products and services that help
hospitals measurably improve the safety and quality of care.
Carefusion Corp has a market cap of $6 billion; its shares were
traded at around $26.73 with a P/E ratio of 15.3 and P/S ratio of
Sold Out: Hess Corp (
David Einhorn sold out his holdings in Hess Corp. His sale prices
were between $42.31 and $56.07, with an estimated average price
of $48.79. Hess Corporation, is a global integrated energy
company engaged in the exploration for and the production,
purchase, transportation and sale of crude oil and natural gas,
as well as the production and sale of refined petroleum products,
electricity. Hess Corp has a market cap of $17.32 billion; its
shares were traded at around $49.64 with a P/E ratio of 12 and
P/S ratio of 0.5. The dividend yield of Hess Corp stocks is 0.8%.
Hess Corp had an annual average earnings growth of 7.2% over the
past 10 years.
Sold Out: Expedia, Inc. (EXPE)
David Einhorn sold out his holdings in Expedia, Inc.. His sale
prices were between $44.04 and $59.39, with an estimated average
price of $52.19. Expedia, Inc. is one of the world's travel
services companies. Expedia, Inc. has a market cap of $7.79
billion; its shares were traded at around $55.79 with a P/E ratio
of 21.3 and P/S ratio of 2.3. The dividend yield of Expedia, Inc.
stocks is 0.9%. Expedia, Inc. had an annual average earnings
growth of 4.1% over the past 5 years.
Sold Out: Best Buy Co Inc (
David Einhorn sold out his holdings in Best Buy Co Inc. His sale
prices were between $16.94 and $22.62, with an estimated average
price of $18.81. Best Buy operates in a single business segment,
selling personal computers and other home office products,
consumer electronics, entertainment software, major appliances
and related accessories principally through its retail stores.
Best Buy Co Inc has a market cap of $5.15 billion; its shares
were traded at around $15.33 with a P/E ratio of 4.3 and P/S
ratio of 0.1. The dividend yield of Best Buy Co Inc stocks is
4.4%. Best Buy Co Inc had an annual average earnings growth of
13.9% over the past 10 years. GuruFocus rated Best Buy Co Inc the
business predictability rank of 5-star.
Sold Out: Compuware Corporation (CPWR)
David Einhorn sold out his holdings in Compuware Corporation. His
sale prices were between $8.63 and $10.2, with an estimated
average price of $9.53. Compuware Corporation provides business
value through software and professional services that optimize
productivity and reduce costs across the application life cycle.
Compuware Corporation has a market cap of $1.89 billion; its
shares were traded at around $8.62 with a P/E ratio of 27.4 and
P/S ratio of 1.9. Compuware Corporation had an annual average
earnings growth of 11% over the past 10 years.
Here is the complete portfolio of David Einhorn. Also check out:
1. David Einhorn's Undervalued Stocks
2. David Einhorn's Top Growth Companies, and
3. David Einhorn's High Yield stocksAbout GuruFocus:
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