Investors interested in the strategies of
may want to note that their top holding, Apple Inc. (
), is trading for close to its 52-week low, and less than the
average price either of the two managers paid for their shares.
, famous for the performance of his Greenlight Capital hedge
fund, began buying the company in the second quarter of 2010,
reporting in his annual letter to paying an average purchase
price of $248.09 per share. At the time, Einhorn noted his
interest in its $40 per share in cash, the fact that it had not
penetrated its markets, and its potential, albeit slower, future
After numerous purchases since, he reported owning a holding of
1,307,006 shares at the end of the fourth quarter. The size
places it at the top of his holdings list, comprising 10.9% of
his entire stock portfolio.
The share price today of $444.93 is approximately 22.9% lower
than the average cost of all of Einhorn's shares, $577.16,
according to his Top Bargain Candidates of David. It is also
close to a 52-week low share price of $439.88, according to
GuruFocus data, after tumbling close to 36% off its all-time peak
of $705.07 reached in September.
Einhorn took the stock's fourth-quarter fall as an opportunity to
add to his position, purchasing 216,116 shares.
Apple's cash position since Einhorn purchased has increased to
approximately $65 per share, which Einhorn believes should be
more generously shared with shareholders than the $2.65 per share
quarterly dividend the company initiated in the third quarter of
2012. Last week he won a lawsuit against Apple to block it from
bundling a referendum on requiring a shareholder vote before
issuing preferred shares with other proposals into one vote.
"A spokesman for Greenlight said the company was 'pleased' with
the decision and looked forward to Apple considering its proposal
to return more cash to shareholders," the Wall Street Journal
David Tepper, founder of Appaloosa Management, returned 30% for
2012, making him one of the top-performing hedge fund managers
last year. Apple was his firm's largest stock position since the
first quarter of 2012. Then, in the fourth quarter, he added
391,473 shares to the holding, bringing its total size to 912,661
shares, and 10.5% of his portfolio.
Tepper entered Apple in early 2011 when its market price was
$345.68, on average. His average purchase price for his fourth
quarter shares was $577.16, which is 22.9% higher than Apple's
current $444.93 share price, according to his Top Bargain
Only one other stock in Tepper's fund, Freeport McMoRan Copper
& Gold (
), has a current market price lower than his average purchase
price of the fourth quarter.
Tepper said in a Bloomberg interview in January that he is very
positive on the economy:
"Everything lines the right way. I am saying that for someone
in my office because we play Scrabble and he hated the word I
used last night...If you look at the markets, they are trading at
a really low multiple. 13 handle this year, 11 handle next year
on the S&P. You have unprecedented money creation here and
you have Japan who went to 2% target last night. You basically
have the competing assets. Junk, I rallied already 40 basis
points this year. 567 or some ungodly number like that. If you
look at the multiple on that compared to the alternatives to
anything in credit, there's nothing close. There's never been
this big of a gap in the history of my life at least."
Apple is also trading at relatively low multiples, with a P/E of
10.2 close to a 10-year low, a P/B of 3.28 close to a five-year
low and P/S of 2.6 close to a three-year low.
In the fourth quarter, Apple reported increased quarterly revenue
and net profit, while its gross margins decreased to 38.6% from
44.7% in the fourth quarter of 2011. Sales were also at records
for its iPhone and iPad, as sales of older products, such as the
Mac and iPod, were lower than the previous year.
Tim Cook, Apple's CEO, will face shareholder questions about its
$137.1 billion cash stockpile and its future products in at its
annual meeting tomorrow.
See David Einhorn's portfolio here and David Tepper's portfolio
here.About GuruFocus: GuruFocus.com tracks the stocks picks and
portfolio holdings of the world's best investors. This value
investing site offers stock screeners and valuation tools. And
publishes daily articles tracking the latest moves of the world's
best investors. GuruFocus also provides promising stock ideas in
3 monthly newsletters sent to