Hess Corp. (HES), Apple Inc. (AAPL): Billionaire David Einhorn’s Latest Shakeups

Billionaire David Einhorn founded his Greenlight Capital hedge fund in 1996. Einhorn emphasizes intrinsic value for achieving out-sized investment returns and safeguarding capital regardless of market conditions. Einhorn says of his philosophy…

Let’s check out his top moves for last quarter (see more of Greenlight’s bullish moves).

Einhorn added both Hess Corp. (NYSE:HES) and Oil States International, Inc. (NYSE:OIS), which are also big bets by fellow hedge funds Elliott Associates and Jana Partners, respectively. Hess Corp. (NYSE:HES) has seen billionaire Paul Singer of Elliott Associates take an activist role in hopes of splitting Hess’ international and U.S. operations (check out Elliott’s latest moves).

Hess Corp. (NYSE:HES) has a number of  other tailwinds to support the stock. Hess is targeting a 50/50 ratio between unconventional and conventional assets by 2013, versus its existing ratio of 80/20. Hess’ new lease in the Bakken and augmentation of Utica acreage should help promote its new strategy.

Hess Corp. (NYSE:HES) has also been on an asset sale campaign, which amounted to $3.4 billion in 2012, including its interest in the Bittern, Beryl and Schiehallion fields in the UK. These funds are expected to fund Hess’ exploration and production opportunities.

Oil States is a diversified oilfield services company, manufacturing products for deep-water production facilities and sub-sea pipelines. Most notable news of late is that Jana Partners has a 9.2% stake in Oil States, with the activist now pushing for a REIT spin-off (see Jana’s top stocks). Sterne Agee believes the accommodations unit could be worth $5.5 billion under a REIT structure. Oil States’ market cap is only $5 billion.

Management has addressed the possibility of a spin-off, yet, they appear to be “dragging their feet.” With Jana’s track record, I believe there is value to be uncovered at Oil States. The company also only trades on the cheap side at 13.2 times earnings, compared to the likes of Cameron International’s 20.3 times and FMC Technologies’ 33.4 times.

Tech dumps

Yahoo! has a leading position in the display ad market, but this leading position appears to be falling. IDC estimates that Google Inc (NASDAQ:GOOG) overtook both Facebook Inc (NASDAQ:FB) and Yahoo! in the display ad market share last year. What’s more Google is dominating Yahoo! in the search market.

Yahoo! also has a small presence in the mobile search market. However, one of the things shutting Yahoo! out is that Android and iOS, the two most-used operating systems in the U.S., come installed with Google search. Thus, Google already commands close to 100% of the mobile search market share.

One possible reason for the Microsoft sell-off was the fact that the company’s key market is the core computing market. The company is dependent on the PC market for the majority of its revenue. Enterprise could be a big part of Microsoft’s future, but for now, tablets and mobile devices are pressuring Microsoft’s key revenue streams.

Microsoft remains a small player in the search market, and Google’s Chrome is challenging the PC OS market. The other negative for the company is the expected growth in earnings over the next five years is 10% annually, trailing the 18.7% growth expected for the peer group.

Billionaire David Einhorn sees value in following a couple of hedge fund leaders by investing in Hess and Oil States. I believe there is long-term value in investing in both of these stocks. I think there are a number of headwinds for both Yahoo! and Microsoft and would hold off investing in these stocks.