Highlights From Greenlight Capital’s 2015 Q1 Investor Letter

We mentioned that the biggest position in Greenlight Capital’s portfolio at the beginning of this year was Micron Technology, Inc. (NASDAQ:MU). The long/short hedge fund had $1.1 billion invested in this stock and the losses from it exceeded a quarter of a billion dollars if it hadn’t trimmed its position. Here is what Einhorn said about this position:

“We had one significant loser during the quarter. Micron Technology (MU) shares declined 23%. Weak PC sales drove a shortfall in DRAM demand leading to lower prices and reduced earnings. Our thesis is that the consolidated DRAM industry will act more rationally in the face of slower demand, moderating future cyclical declines and leading to higher profitability through the cycle. The current downturn is the first opportunity to test this thinking: either the industry will overproduce, fight for share, and kill profitability, or it will respond sensibly to slower cyclical demand and merit an upward revaluation. While we are watching industry behavior very closely, we believe our thesis is intact.”

Value investor Seth Klarman probably sensed the trouble ahead and cut his Micron Technology, Inc. (NASDAQ:MU) holdings by 62% during the fourth quarter. Klarman still had $700 million invested in the stock at the beginning of this year. Micron Technology, Inc. (NASDAQ:MU) shares have recovered around 4% since the end of the first quarter. However, it remains to be seen whether Einhorn is right about the stock.

The second part of this article can be read here.

Disclosure: Long SUNE.