Highlights From Greenlight Capital’s 2015 Q1 Investor Letter

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We have obtained a copy of Greenlight Capital‘s 2015 Q1 investor letter. David Einhorn (Investor Letters, Stock Picks) is one of the most credible hedge fund managers whose investor letters are sought after. Micron Technology, Inc. (NASDAQ:MU) was the biggest position in Greenlight Capital’s 13F portfolio at the beginning of the first quarter, but Einhorn decided to start his investor letter by talking about its second and third biggest positions, Apple Inc. (NASDAQ:AAPL) and Sunedison Inc (NYSE:SUNE). Here is what Einhorn said about Apple:

“AAPL shares advanced 13%, as the iPhone 6 has proved to be a blockbuster that drove the company to 30% revenue growth and 48% EPS growth in the December quarter. AAPL also announced the April launch of the Apple Watch, its first new product category in five years. While we have modest expectations for Apple Watch and don’t expect AAPL to maintain this level of growth, the market expects even less, as it continues to value AAPL shares at a discounted valuation. We believe that AAPL is a superior company that merits a premium multiple.”

Greenlight Capital

David Einhorn initiated a position in Apple Inc. (NASDAQ:AAPL) exactly five years ago when the stock was trading at less than a third of today’s valuation. Let’s refresh your memories about what Einhorn said about Apple when he initiated that position:

“Apple Inc. (AAPL) is one of the world’s most successful and innovative technology companies.  Over the last few years, the company has transitioned from a niche PC hardware and software provider into a more diversified company with market leadership positions in mobile communications and portable entertainment via its iPod, iPhone, and iPad products and the iTunes service.  From 2004 to 2010 revenues have grown about 700% or almost 40% per year.  Earnings have grown even faster from $0.38 to an estimated $14.00 per share.  AAPL has a fortress balance sheet with more than $40 per share in cash and investments.  During the recent downturn, the Partnerships established a position at an average price of $248.09 per share, representing 15x this year’s estimated earnings net of cash.  While growth over the next few years will certainly be slower than it has been over the last few years, AAPL does not appear to have fully penetrated its market opportunities.  Accordingly, the opportunity to invest in this leading company (with a better financial profile than market participants seem to acknowledge) appears iTtractive at its current multiple. AAPL shares ended the quarter at $251.53 each.”

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