Billionaire David Einhorn’s 13F Portfolio in Green Despite Sinking Sunedison

David Einhorn‘s Greenlight Capital had a disastrous 2015 as the fund posted losses to the tune of 20%. This marked the second losing year in the firm’s almost 20-year history. While some of the money manager’s picks like Sunedison Inc (NYSE:SUNE) continued to spiral downward, many others helped to push Greenlight’s return needle in the right direction during the first quarter. After taking a weighted average return of the fund’s 13F holdings in companies worth over $1.0 billion, we found out that 40 positions saw a gain of 3.9% in the first three months of this year. Hence, we have decided to take a closer look at some of the stocks that had the biggest impact on Greenlight’s returns in the first quarter.

Our research determined that following the small-cap stocks, that hedge funds are collectively bullish on, can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).

#5 Sunedison Inc (NYSE:SUNE)

– Shares Owned by Greenlight Capital (as of December 31): 18.61 Million

– Value of Holding (as of December 31): $94.7 Million

As of mid-March the short interest in Sunedison Inc (NYSE:SUNE) stood at about 45% of the company’s float. The stock price of the debt ridden, ill-managed $137 million developer of photovoltaic energy solutions fell by more than 91% during the first quarter as the company continues to fight bankruptcy. In case of a bankruptcy, the yielcos that the solar giant created, namely TerraForm Power and TerraForm Global might also have to face the music, according to restructuring experts, although they will most likely avoid bankruptcy. David Gallo’s Vallinor Management was hoping for a rebound when it raised its Sunedison Inc (NYSE:SUNE) holding by 43% to 22.24 million shares during the fourth quarter of 2015.

 

#4 Macy’s, Inc. (NYSE:M)

– Shares Owned by Greenlight Capital (as of December 31): 18.61 Million

– Value of Holding (as of December 31): $94.7 Million

On the plus side is the 23% hike in Macy’s, Inc. (NYSE:M)’s share price registered during the first three months of this year, after slumping by about 47% last year. Greenlight initiated a position in the company during the last quarter of 2015. Although the $12.5 billion omnichannel retailer managed to beat both the top and bottom line estimates in its financial results for the fourth quarter, it expects the total sales for fiscal year 2016 to fall by 2%. However, the company is receiving a significant interest pertaining to the real estate deals that it is seeking to make. In this regard the company also appointed William Lenehan CEO of Four Corners Property Trust to its board. The move is likely to be orchestrated by activist investor Jeffrey Smith‘s Starboard Value that holds about 3.31 million shares of Macy’s, Inc. (NYSE:M), and which employed a similar strategy for Darden Restaurants, pressuring it to spin off its real estate into the Four Corners Property Trust REIT.

 

#3 Michael Kors Holdings Ltd (NYSE:KORS)

– Shares Owned by Greenlight Capital (as of December 31): 8.97 Million

– Value of Holding (as of December 31): $359.54 Million

Even a more successful bet for Greenlight Capital was the $9.3 billion global accessories, footwear and apparel company Michael Kors Holdings, whose stock advanced by more than 42% during the January-March period. Shares are still trading about 48% lower than their historical high in February 2014. Things have been going downhill for Michael Kors Holdings Ltd (NYSE:KORS) since then, as it lost more and more business to its competitors, such as Kate Spade and Coach, which also operate in the ‘affordable luxury’ pricing segment. However, impressive financial results for the company’s third fiscal quarter, ended December 31, indicated that the company is gaining back the lost ground. The top line grew by 9.9% on a year-over-year basis, if the effects of currency fluctuations are excluded and despite high costs from new store openings profit margin stood at 29% of sales. Einhorn raised Greenlight’s stake in the company by 28% during the fourth quarter. Cliff Asness‘ AQR Capital Management also hiked its Michael Kors Holdings Ltd (NYSE:KORS) holding by 14% to 2.78 million shares during the same period.

#2 General Motors Company (NYSE:GM)

– Shares Owned by Greenlight Capital (as of December 31): 8.97 Million

– Value of Holding (as of December 31): $359.54 Million

A 14% reduction in its General Motors Company (NYSE:GM) stake during the fourth trimester worked well for the firm as the stock slid by about 10.4% in the following three months. Last month, for the first time in five years, Ford managed to outsell GM in the US by 936 light vehicles as its sales rose by 7.8%, while GM registered only a 0.9% increase year-on-year. David Tepper‘s Appaloosa Management LP holds about 12.59 million shares of General Motors Company (NYSE:GM).

 

#1 Apple Inc. (NASDAQ:AAPL)

– Shares Owned by Greenlight Capital (as of December 31): 6.28 Million

– Value of Holding (as of December 31): $661.54 Million

Greenlight reduced its position in Apple Inc. (NASDAQ:AAPL) by 44% in the fourth  quarter and the stock price of the Cupertino-based tech giant advanced by 4.5% in the following three months. Many investors are worried that the iPhone Replacement cycle might be slowing, or the smartphone might have reached a saturation point in terms of market penetration, but a recent survey by Goldman Sachs revealed promising prospects for the next version of the most popular smartphone in the U.S. The majority of iPhone users were considering replacing their gadget this fall and 11% of the respondents were thinking of getting their first iPhone, of which 25% had their eyes on the iPhone 7. Renowned activist investor Carl Icahn‘s Icahn Capital Lp reduced its exposure to Apple Inc. (NASDAQ:AAPL) by 14% in the fourth quarter to 45.76 million shares.

 

Disclosure: None