David Einhorn Investor Letter: Long Altice USA Inc (ATUS), BT Group PLC (BT), Still Short Tesla Inc (TSLA)

The first of David Einhorn’s new stock picks is Altice USA Inc (NYSE:ATUS), a pure-play cable provider that is cheaper than peers like Charter Communications Inc (NASDAQ:CHTR) and Cable One, thanks to a lower EBITDA multiple. Einhorn isn’t worried about cord-cutting concerns that have limited Altice shares to trading at a 10% free cash flow yield, stating that the switch from linear video to broadband streaming video is a beneficial one for Altice USA Inc (NYSE:ATUS), meaningfully pushing up data consumption rates.

The hedge funds in our database collectively grew far more bullish on Altice USA Inc (NYSE:ATUS) in Q2, as 38 funds were shareholders of the stock at the end of the quarter. That represented a 50% increase from the start of the quarter, while the value of hedge funds’ positions more than doubled to $1.05 billion.

Greenlight also opened a medium-sized position in the London-traded shares of BT Group PLC (NYSE:BT), which also trades on the NYSE. Einhorn liked BT Group’s cheap valuation of 4.7x EV/EBITDA and its 8% dividend yield when based on the fund’s 2019 estimates (the current yield is 6.77%). Greenlight also sees value potential in BT Group PLC (NYSE:BT)’s Openreach platform, which it believes could be split off from the company.

Lastly, Einhorn sold off the remainder of his fund’s Apple Inc. (NASDAQ:AAPL) position at the end of August, noting that it had earned the fund over $1 billion during the eight-year period it occupied Greenlight’s 13F portfolio. Einhorn praised Apple Inc. (NASDAQ:AAPL) for returning more of its profits to shareholders in recent years, which Greenlight itself had lobbied for in a 2013 proposal that had sought the creation of a preferred Apple stock called iPrefs. While Apple did not institute that particular proposal, it did buy back over 25% of its shares over the following five years.

Einhorn expressed some concern over possible retaliation against Apple Inc. (NASDAQ:AAPL) as part of the China trade war and doesn’t find Apple’s 17x forward earnings to be overly enticing at this point. A total of 90 hedge funds tracked by Insider Monkey were long Apple on June 30, down from 97 at the end of March.

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