Apple Inc (NASDAQ:AAPL) is Billionaire David Einhorn’s Top Stock Pick

GREENLIGHT CAPITALApple Inc (NASDAQ:AAPL) is still the top pick in billionaire David Einhorn’s portfolio. Cornell graduate David Einhorn is the highly successful value investor behind Greenlight Capital. The fund’s annual return since inception (in 1996) has been around 20% and Einhorn is receiving a boom in popularity from his renowned short of Green Mountain Coffee Roasters Inc (NASDAQ:GMCR). We have gone through Greenlight’s 13F filings for the second quarter of 2012 and compared it to the filing for the previous quarter, trying to find major themes in Einhorn’s investment activity, and here are some trends for the long side of his portfolio that we have noticed:

Health care plans. The most apparent trend in Greenlight’s portfolio is the addition of two new positions which each occupy a place in the top ten 13F holdings: health insurers Cigna (NYSE:CI) and Coventry (NYSE:CVH). Each company trades at a trailing P/E of 10, with Coventry’s forward P/E also being 10 and Cigna’s being 7. As such there is a value case for these insurers as long as their business stays stable. While they both reported declines in earnings in their most recent quarter compared to the same period in 2011, revenue increased at a double-digit growth rate. Perhaps Einhorn believes that this revenue growth will continue and the companies will stabilize their margins, delivering earnings growth which will drive up the stock price. Lee Ainslie and Larry Robbins are among the hedge fund managers who are bullish about Cigna.

Staying confident. Greenlight kept its largest position- Apple Inc (NASDAQ:AAPL) constant, but the stocks in the second through fourth spots saw significant increases from big winner Seagate Technology (NASDAQ:STX), which has more than doubled this year, to General Motors (NYSE:GM), which is slightly down. The position in Seagate increased from 14.5 million shares to 23.2 million shares, and the fund reported 17.4 million shares of GM in the portfolio, up from 14.8 million three months earlier. Both of these stocks are trading at value levels (even after Seagate’s rise). GM trades at only five times forward earnings estimates and a five-year PEG of 0.5; Seagate also trades at five times forward earnings, has an even lower five-year PEG of 0.2, and pays a 3.9% dividend yield. Seagate looks like a better stock to us at it marries low valuation multiples with high expected growth and dividend payments, but we can understand why Greenlight would want seconds on both stocks. Einhorn is also extremely bullish about Apple Inc (NASDAQ:AAPL) and thinks Apple will become a trillion dollar company.

Adios, Dell. The one position that Einhorn reported in the top ten in Greenlight’s portfolio for the first quarter that has since been sold out of entirely is Dell Inc (NASDAQ:DELL). We covered this move and explained that the company had failed to expand its business lines as Einhorn had wanted. The company has been in transition away from PCs and toward enterprise operations, and has spent a good deal of cash making acquisitions in that area.

Xerox. This was another position that Greenlight added heavily to in the second quarter, going from 15.4 million shares at the beginning of April to 26 million shares at the end of June. Xerox Corporation (NYSE:XRX) is best known for its business equipment but also manages business processes and IT; perhaps the fund has decided that what it was looking for in Dell was there in Xerox all along. Xerox Corporation (NYSE:XRX) is also a fairly strong value stock: its business is stagnant compared to a year ago but it trades at only eight times earnings and pays a dividend yield of 2.4%. So far this year the stock is down 13%, and it is currently trading below its June close, so an investor could get it at a lower price than Einhorn did.

Einhorn has a good reputation as an investor and so his movements should be closely watched. We like his bullishness on positions such as Apple Inc. (NASDAQ:AAPL), Seagate, General Motors (NYSE:GM), and Xerox, and we think it was probably right for him to get out of Dell. Health insurance is an area where we are a little more concerned about various risks, but on a quantitative basis we see the potential to generate value and these positions may be worth further investigation.

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Click here to Read Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 74 percentage points in 2.5 years. Our beta is only 1.2 (download a FREE newsletter and see the details inside)

Lists

Best Selling Magazines in the World

Shortest People in History

The Most Celebrated Holidays in the World

Most Expensive Handbag Brands in the World

Top Selling Comic Book Issues of this Century

The Most Powerful Women in Politics

Best Paid DJs

Most Rebellious Female Artists

Best Paid TV Actresses of 2014

Best Paid Actors of 2014

Most Expensive Horses in the World

Tallest People Ever

Most Encouraging Feminist Celebrities

Best Paid Supermodels of 2014

Top 10 Suburbs for Retirement in 2015

10 Wealthiest Cities in America

Top 10 TED Talks for Entrepreneurs

Best TED Talks on Education

25 Most Dangerous Places to Live in America

Top 10 Ski Resorts in the United States – 2014 List

Top 10 Most Remote Places in the World

Most Visited Museums in the United States

Wealthiest Photographers in the World

Most Famous Gay Athletes

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!