David Einhorn’s Greenlight Capital is one of the most prominent and followed value-oriented hedge funds on Wall Street. Between 1996 and 2013, it managed to return 19.5% per year, on average. However, 2016 has not been a great year for the firm, which only gained 3.8% in the first nine months of the year according to its third-quarter letter to investors, versus the S&P 500’s 7.8% surge.
In this article we’ll take a look into some of the most notable moves disclosed by Greenlight in its third-quarter 13F filing. As per the document, the firm’s equity portfolio was valued at $5.23 billion on September 30 and had a slight focus on consumer discretionary (25% of its portfolio’s value), information technology (18%), and industrials (16%) stocks.
At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
Twenty-First Century Fox Inc (NASDAQ:FOXA)
Let’s start with Twenty-First Century Fox Inc (NASDAQ:FOXA), which was one of Greenlight’s top-15 positions on June 30, being valued at almost $129 million at the end of the second quarter. However, between July and September, the fund sold all 4.76 million shares it held on June 30, possibly seeking to cut its losses, as the stock tumbled by 10.3%. Another fund that jumped ship was Thomas Steyer’s Farallon Capital Management, which disposed of more than 5 million shares over the third quarter.
Both Einhorn and Steyer must be regretting their decision to leave Twenty-First Century Fox Inc (NASDAQ:FOXA), as the shares rebounded by more than 15% since the fourth quarter started, helped by AT&T Inc. (NYSE:T)’s potential acquisition of Time Warner Inc (NYSE:TWX), and by a top- and bottom-line beat with its fiscal first quarter results. EPS of $0.51 beat the Street’s consensus by $0.07, while revenue of $6.51 billion came in $20 million ahead of expectations.
Take-Two Interactive Software, Inc. (NASDAQ:TTWO)
Next up is Take-Two Interactive Software, Inc. (NASDAQ:TTWO), in which Greenlight cut its position in half over the third quarter, to 1.37 million shares, valued at $62.12 million at the end of the period. The move should not necessarily be interpreted as a bearish signal though; with the stock up by 39% year-to-date, and having gained 23.1% in the third quarter, the sale was more likely a profit-taking and/or portfolio rebalancing move. Also taking profits while remaining a big investor in Take-Two Interactive Software, Inc. (NASDAQ:TTWO) was Jim Simons’ Renaissance Technologies, which held 2 million shares on September 30, after disposing of 20% of its stake in the third quarter.
Take-Two shares have continued to surge in the fourth quarter, gaining another 7%. However, in a recent research note, Loop Capital warned that Take-Two was among the tech companies that would be most hit by a Trump presidency and its proposed protectionism measures.
Love Take-Two’s games? Why not take a look at our list of the 11 Best PC Games of 2015.
On the next page we’ll run through three more stocks favored by Einhorn and his team.
Apple Inc. (NASDAQ:AAPL)
Over the third quarter, Greenlight also reduced its position in Apple Inc. (NASDAQ:AAPL), which had cost it plenty of money in the first-half of the year. As the stock rebounded by almost 20% between July and September, Einhorn’s firm sold 25% of its shares, keeping 5.19 million shares worth $586.8 million. Warren Buffett’s Berkshire Hathaway remained the largest hedge fund investor of Apple in our system as of the end of September, owning 15.22 million shares.
Apple Inc. (NASDAQ:AAPL) continued to surge until late-October, before returning to its downtrend. However, the losses were larger than the gains, taking quarter-to-date returns to a loss of 2.35%. The decline was most recently driven by concerns about weak iPhone sales, poor demand in China, and the impact of a Trump presidency over a company that has such vast international exposure.
Unlike its peers above, AMERCO (NASDAQ:UHAL) was on the receiving end of a lot of bullishness from Greenlight in the third quarter, as the fund boosted its position by 180% to 220,000 shares valued at $71.33 million as of September 30, possibly taking advantage of the depressed stock price, as the shares lost more than 13.2% over the period. Another notable investor was Cliff Asness’ AQR Capital Management, which declared holding 138,880 shares of the company as of the end of September.
The move appears to be well-timed, as AMERCO (NASDAQ:UHAL) has gained almost 6.9% in the fourth quarter, even though it posted a top- and bottom-line miss with its fiscal second quarter results a couple of weeks ago. EPS of $8.22 missed the Street’s consensus by $0.56, while revenue of $998.91 million, up by 3.7% year-over-year, came in $11.09 million short of expectations.
General Motors Company (NYSE:GM)
Finally, there’s General Motors Company (NYSE:GM), which could be one of the big losers of a Trump presidency, as protectionist measures aim at its Mexico production facilities and imports. Einhorn’s fund remained long the stock ahead of the election results, holding 17 million shares worth more than half-a-billion dollars on September 30. Also bullish on the company as of the end of the third quarter were Berkshire Hathaway (50 million shares) and Harris Associates (68.94 million shares).
Interestingly, shares of General Motors Company (NYSE:GM) have risen by 5.15% in the fourth quarter, and by 4.3% since Donald Trump was elected as President. On Monday, CEO Mary Barra told Automotive News that the company was on its way to having one of the most profitable years in its history, even though its U.S. market share continues to decline.
Disclosure: Javier Hasse holds no interest in any of the securities or entities mentioned above.