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.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

On the Move: The 10 Fastest Growing Businesses in 2015

Fast Money: The 10 Highest Paying Fast Food Restaurants

Mixing It Up: The 14 Best Music Mashups of 2014

Rito Pls Buff: The 10 Least Played Champions in LoL Season 4

10 Covers of Popular Songs that are Better than the Originals

Must See TV: The 9 Most Anticipated Shows of 2015

The 15 Biggest Box Office Bombs of All Time

10 Things The World Can’t Stand About Americans

Picture Perfect: The 6 Smartphones with the Best Cameras

The 10 Best Countries To Work In the World

A Profitable Day At The Track: 5 Tips For Betting On Horses

Tearing You Apart: 6 Bad Habits That Ruin Relationships

Learning on the Job: The 6 Biggest Mistakes Parents Make

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

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 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!