Highlights From Greenlight’s Q4 Letter: Micron Is Out & Two New Positions

Micron Technology, Inc. (NASDAQ:MU), which was the firm’s biggest winner in 2014, was the largest loser in 2015. After a more detailed analysis, Greenlight decided to close out its stake in the company. As of the end of the third quarter, Greenlight held roughly 12.37 million shares of the company, worth more than $185 million. Micron Technology, Inc. (NASDAQ:MU)’s stock ended 2015 with losses of more than 59%. Nevertheless, Greenlight managed to earn an internal rate of return of 14%.

Micron Technology, Inc. (NASDAQ:MU) has been one of Greenlight’s biggest positions for a long time and the fund mentioned it in almost each investor letter. The fund’s thesis took a hit in the third quarter and the fund reduced its stake, consequently saying in the investor letter for the quarter:

“Two other problems with our thesis have emerged. First, the Chinese have expressed interest in getting into DRAM. Our prior view was that the consolidated industry would not face new entrants. While the Chinese threat is distant, we judge it relevant. Second, MU announced a much more aggressive capital spending plan for NAND than we envisioned. While management believes that the extra investment will generate adequate returns, we are unconvinced. With separate problems clouding both the short-term and long-term, we determined that there is enough risk to the thesis to reduce the position.”

On the next page, we are going to discuss two of Greenlight’s new positions, Macy’s, Inc. (NYSE:M) and Mylan NV (NASDAQ:MYL).