Billionaire David Einhorn’s Stock Picks Include Apple Inc. (NASDAQ:AAPL)

Page 1 of 2

We track 13F filings from hedge funds and other notable investors because- even with the stock holdings listed on these filings being from the end of the quarter, generally six to seven weeks before the filing is made public- we believe that there are a couple different techniques that investors can sue to profit from them. It’s actually possible to develop successful investment strategies based on 13Fs; the most popular small cap stocks among hedge funds, for example, tend to outperform the S&P 500 by 18 percentage points per year on average (learn more about our small cap strategy). We also like to provide a brief overview of what hedge fund managers are doing so that investors can follow up on any interesting stock ideas.

Billionaire David Einhorn of Greenlight Capital is one of the most closely followed hedge fund managers in the world. At a recent investor presentation, after describing a short thesis for Green Mountain Coffee Roasters, he said in transition to his next topic “if you take the CR away from GMCR, you get GM.” General Motors stock dropped nearly instantly, before recovering as it became clear that the fund was actually long GM. Read on for some themes we noticed in this most recent 13F when compared to previous filings.

GREENLIGHT CAPITALConsumer technology. Greenlight added shares of both Apple Inc. (NASDAQ:AAPL) – which remained the fund’s largest holding by market value- and Microsoft Corporation (NASDAQ:MSFT). The fund now owns 1.3 million shares of the former and close to 11 million shares of the latter. Wall Street analysts are quite bullish on Apple Inc. (NASDAQ:AAPL) with the five-year PEG ratio being 0.6. While we aren’t quite that optimistic we do think it is a good value at a trailing P/E of 11. Einhorn has been urging Apple Inc. (NASDAQ:AAPL)’s management to return more cash to shareholders, including potentially through issuing preferred stock. Read more about Einhorn’s proposal for Apple. Microsoft carries a forward P/E of 9, with earnings estimates expected to see a temporary bump as new versions of Windows and Office are released. Both of these companies were on our list of the most popular stocks among hedge funds in the third quarter of 2012 (see the full top ten list).

Health insurers. Einhorn and his team have been long health insurers for some time, and last quarter Greenlight counted two insurers among its ten largest long equity positions after adding shares of Aetna Inc. (NYSE:AET) and Cigna Corporation (NYSE:CI). Health insurers are generally trading at low earnings multiples, possibly as investors worry about federal regulation if health care cost increases do not slow. Aetna and Cigna are no exceptions as their trailing earnings multiples are 10 and 11 respectively. A recent acquisition has boosted Cigna’s revenue and earnings; Aetna’s sales saw a double-digit growth rate last quarter compared to the fourth quarter of 2011 but earnings were actually down. Analyst consensus for 2014 implies modest growth on the bottom line, resulting in P/Es in the 8-9 range.

Here’s a stock that Einhorn has been selling:

Page 1 of 2
Comments
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

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

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!