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5/15/2013 @ 7:02PM |10,450 views
Einhorn Was Adding To Apple While Waiting For Tim Cook To Follow His Advice
(Photo by Evan Agostini/Invision/AP)
In February, David Einhorn called on Apple Apple’s board to leverage up the company’s pristine balance sheet and return some of its massive cash hoard to shareholders. His prescription for preferred shares called iPrefs would unlock value that was locked up in an overseas vault, Einhorn argued.
By April Apple had come around, and while it stopped short of the unique hybrid recommended by Einhorn the company did upsize its buyback commitment, hike the dividend and tap the debt market to finance the whole thing.
Now, in Greenlight Capital’s first-quarter disclosure, it becomes clear that Einhorn was doubling down on his Apple bet in the first quarter.
As of March 31, Greenlight held just under 2.4 million shares, up from 1.3 million at the end of 2012. (It would appear that Einhorn excerised some options as calls listed in the February filing due not appear in Wednesday’s 13F.)
The increase came as Apple’s stock kept sliding. Shares dropped from $532.17 December 31 to an early March low of $419 before finishing the quarter at $442.66.
Judging from a recent conference call for Greenlight Re, Einhorn may have kept adding to the position in the second quarter. The hedge fund manager, who said Apple’s shareholder-friendly actions in April marketd “a major step forward,” noted that he has added to his position in the iPad-maker, though it is not clear whether he meant since the firm’s last portfolio disclosure or more recent purchases.
While the first-quarter filing shows an addition to Apple, Einhorn also closed up stakes in a pair of other tech heavyweights.
Greenlight sold a 4.8 million share stake in Yahoo Yahoo, a stock he has hopped in and out of several times in recent years. The most recent foray looks like a lucrative one, given that the stock surged some 48% from the start of July through the first quarter (Einhorn bought in Q3). Shares of Yahoo rallied to more than $23 apiece in Q1 and have barely looked back in Q2, closing at $27.34 Wednesday.
The other big tech name Einhorn eliminated from his portfolio in Q1 has been flying as well, meaning the hedge fund may have left some gains on the table. Google Google hit a fresh all-time high of $916.38 intraday, but only traded as high as $844 in the first quarter, when Einhorn sold 63,000 shares.
It is important to note that the 13F filings from the likes of Einhorn and Appaloosa Management founder David Tepper – who sparked a market rally this week and expressed his continued confidence in Apple even after dialing back his position in Q1 – represent a snapshot of hedge fund portfolios at a particular moment in time, after the close of trading March 31.
If Einhorn has continued to add to Greenlight’s Apple position in Q2, he could be adding at even cheaper prices, with the stock trading as low as $385.10 in the last month.
A spokesman for Einhorn and Greenlight declined to comment on any portfolio actions beyond the filing.
Shares of Apple lost 3.4% to $428.85 Wednesday, making Einhorn’s reported stake worth a shade over $1 billion.
Buy low, sell high is hardly rocket science when it comes to investing, but it would appear that Einhorn has been playing that trade with the tech trio this year:
