Einhorn increased his Apple Inc. (NASDAQ:AAPL) position, upping his shares 15%, keeping the tech giant as his top stock pick, which now makes up 10.8% of Greenlight’s portfolio.
Apple has fallen over $250 since its $700 peak late last year, and now the stock appears rather cheap on a number of levels (see what you should make of Apple). The tech company trades around 10 times earnings, compared to its five-year average multiple of 16 times. Although its P/E of 10 is in line with those of its peers, such as IBM and Intel, the case can be made that Apple Inc. (NASDAQ:AAPL) deserves to trade at a premium, for Apple has exerted the ability to generate outsized growth despite a struggling economy. Analysts expect Apple to grow EPS at 19% annually over the next five years, compared to the 10% forecasted for both IBM and Intel.
Part of the decline can be attributed to the fact that hedge funds fell out of love with Apple during the fourth quarter. This mass exit by hedge funds appear to have caused an “oversell” of the stock and induced panic among individual investors. Thanks to the price drop, the company already pays a 2.5% dividend yield, but Bloomberg analysts believe that Apple Inc. (NASDAQ:AAPL) will boost its dividend by over 50% to $4.14 per share, which would be a 3.6% dividend yield based on its current share price.
Marvell Technology Group Ltd. (NASDAQ:MRVL) was another buy for Einhorn; he upped his stake 58% and now has Marvell as his fourth largest holding. Marvell Technology Group Ltd. has been in Einhorn’s top ten holdings since his hedge fund first bought the stock during the third quarter of 2011.
The stock is still down 15% to 20% from where Einhorn bought it and he appears to be holding on for a turnaround. Company sales fell 7% in 2013 and the company’s general business model has been under pressure due to its exposure to the PC business (with regards to its hard disk drives). However, the company’s future will be driven by its mobile-focused products, including its latest wireless chips which has the ability to send 3G data to mobile devices anywhere in the world. As well, the company hopes to expand its product portfolio to include new networking and storage devices.
Aetna Inc. (NYSE:AET) was another one of Einhorn’s additions, upping his stake 48% and moving the stock to his fund’s 7th largest position. With the expected rise in Medicaid and Medicare, Aetna has been looking to break into the market, and this includes its acquisition of Coventry Health Care and Genworth’s Medicare Supplement business. Also, as baby boomers start to hit retirement ages, the need and demand for managed health care plans is expected to rise. Aetna Inc. (NYSE:AET)’s healthcare segment, which includes managed health care plans, make up 92% of Aetna’s revenues, making the company an interesting play on the aging population.
