With Its Long Book Posting Solid Gains, Here Are Greenlight Capital’s Top Equity Portfolio Changes

Apple Inc. (NASDAQ:AAPL)

– Shares Held By Greenlight Capital (as of December 31): 5.80 Million

– Value of The Holding (as of December 31): $672.83 Million

Like Chemours, Greenlight Capital  also thought of booking some profits in Apple Inc. (NASDAQ:AAPL), which it has been holding since Q2 of 2010, during the fourth quarter by reducing its holding in the tech major by 24%. However, this decision doesn’t seem to have gone in favor of the fund as Apple Inc. (NASDAQ:AAPL)’s stock has appreciated by over 17% so far in 2017 and is currently trading at its lifetime highs. Moreover, with Oracle of Omaha giving his confidence vote to the company by quadrupling its stake in it, most analysts on the Street think that this rally can continue for a while. Despite reducing its stake, Greenlight continues to be optimistic about Apple’s future prospects citing the repatriation of  cash and tax reform under Trump’s administration, which it expects will help the company in bringing back $200 billion offshore cash and reduce its GAAP taxes going forward. On February 17, Apple revealed that it will soon start manufacturing the low-cost iPhone SE in India. Industry experts think that this move will help the company in making some inroads in the Indian smartphone market. However, a lot of them are of the opinion that this alone won’t help the company to reach its target of selling 10 million phones in the country given the competition it faces from low-cost manufacturers.

General Motors Company (NYSE:GM)

– Shares Held By Greenlight Capital (as of December 31): 13.17 Million

– Value of The Holding (as of December 31): $458.77 Million

– Call Options Held By Greenlight Capital (as of December 31): 25 Million

– Value of The Holding (as of December 31): $871 Million

Though Greenlight capital reduced its equity stake in  General Motors Company (NYSE:GM)by 22% during the fourth quarter, it also initiated a massive derivatives bet on the vehicle manufacturer during that time by purchasing Call options underlying 25 million shares of the company. General Motors Company(NYSE:GM)’s stock has gone nowhere in the last two years since Greenlight Capital initiated its stake in the company. If it wouldn’t have been for the attractive dividend yield of the stock, one could have easily said that Greenlight made next to nothing by sitting on this position for two years. However, the $0.38 per share that the company currently pays – equivalent to a forward yield of over 4% – would have ensured that it at least got more than its money back on this investment. Greenlight continues to remain bullish on the company over the long-term and thinks that the thesis provided by bears is flawed.

“While the bears have been screaming “peak auto” for the last couple of years, we think a strengthening job market will sustain the current upcycle and lead to better than expected credit performance at GM’s finance subsidiary. While the bears also cite long-term concerns over self-driving cars, we see a huge intermediate-term opportunity in assisted-driving cars. In any other industry, investors would be enthused by the developing upgrade cycle, which could last for a number of years as incremental improvements in each model year attract consumers,” the fund said in its recent letter to investors.

According to recent reports, General Motors is currently in talks PSA Group (“Peugeot”) to sell its loss-making ‘Opel’ division. For its fiscal 2016 fourth quarter, GM reported EPS of $1.28 on revenue of $43.90 billion, which was better than analysts’ expectation of EPS of 1.17 on revenue of $40.97 billion.

Disclosure: None