Digging Into Billionaire David Einhorn’s 4Q Investor Letter: Apple Inc. (AAPL), CIGNA Corporation (CI)

Page 1 of 2

GREENLIGHT CAPITAL David EinhornWhat’s Einhorn and Greenlight Capital betting on for 2013? In billionaire David Einhorn and Greenlight Capital’s fourth quarter 2012 letter to investors he outlines his hedge fund’s biggest bets. Greenlight returned 4.9% during the fourth quarter, pushing its total net return for 2012 down to 7.9% (check out the top performing hedge funds).

At the end of 2012, Greenlight’s largest long positions proved to be in Apple Inc. (NASDAQ:AAPL) , CIGNA Corporation (NYSE:CI), General Motors Company (NYSE:GM), gold and Vodafone Group Plc (ADR) (NASDAQ:VOD).

After breaking down what Einhorn said carried Greenlight in 2012 (Part 1: Einhorn’s 2012 Outperformers), it’s time to figure out what he’s betting on for 2013 (see Einhorn’s newest picks). Although Einhorn doesn’t outline his stake in Greenlight’s largest long positions at the end of the fourth quarter, they stacked up as follows for the third quarter:

Stock Rank % of Portfolio
Apple Inc. (NASDAQ:AAPL) 1st 12.1%
General Motors (NYSE:GM) 3rd 8.1%
Cigna (NYSE:CI) 4th 5.5%
Barrick (NYSE:ABX) 24th 1.3%
Vodafone (NASDAQ:VOD) n/a new addition

Apple Inc. (NASDAQ:AAPL). The big news for Apple of late has been the earnings release that showed slowing growth. This coupled with the fact that Apple is increasing capital expenditures has led to uncertainty over whether Apple Inc. (NASDAQ:AAPL) will be able to continue growing at the extraordinary growth rate it has managed in the past. Apple has managed to perform better than some of its competitors, despite a declining PC market.

The increased capital expenditures will be used to make bigger bets on being able to innovate and please the market with new products. The company expects to spend around 10% of its almost $10 billion planned CapEx on new retail stores and the remaining on equipment.

The tech giant still has one of the top balance sheets in the industry with well over $100 billion in cash, short-term investments and long-term marketable securities. Cash flow generation has always excelled for the company, generating some $50 billion in cash flow from operations during fiscal year 2012, and $16 billion in free cash flow last year alone.

With the recent stock’s slide, down 13% year to date, the dividend yield is up to 2.3%. Apple appears to be quite the value play despite the slowing earnings, trading at only

CIGNA Corporation (NYSE:CI). Einhorn notes that his fund closed a several long positions during the fourth quarter, which includes two in the managed care sector, Humana and Wellpoint, both at a small loss. Per Einhorn’s letter, he notes that Greenlight reallocated that freed up capital to other managed care organizations, possibly Cigna? That was already Greenlight’s fourth largest holding at the end of the third quarter.

One of Cigna’s big initiatives included its break into the Medicare Advantage market with its HealthSpring acquisition. The acquisition helps bring the healthcare company’s services full-circle. Cigna’s diversified product portfolio includes: Its U.S. commercial business, international business and expansion in seniors and Medicare business. The other big deal for Cigna is expanding internationally, which accounts for only around 10% of revenues.

General Motors Company (NYSE:GM) has been seeing solid growth thanks to expansion into emerging markets, namely China and India. The car company is also expanding its dealerships in Indonesia and Thailand in an effort to further tap growth opportunities.

Page 1 of 2
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 Click to see monthly returns in table format!

Lists

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

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!