Greenlight Capital’s David Einhorn made a splash this week by seeking a seat on the board of troubled solar company SunEdison (SUNE). SunEdison’s stock is down nearly 90% since July, though Greenlight has been adding to its position since the beginning of this year and now owns about 6% of the company.
While SunEdison is getting the headlines right now, I’m more interested in some of Einhorn’s other investments. Einhorn, like a lot of aggressive hedge fund managers, runs a concentrated long portfolio. So the movement of a single stock or two can have an outsized impact on his portfolio. And Einhorn — like a lot of value managers, myself included — has taken his lumps over the past year.
At any rate, let’s take a look at what Mr. Einhorn has in his portfolio:
| Symbol | Company | Value ($1,000) | % of Portfolio | % of Company |
|---|---|---|---|---|
| AAPL | Apple Inc | 1,238,368 | 20.53 | 0.20 |
| GM | General Motors Co | 489,290 | 8.11 | 1.05 |
| KORS | Michael Kors Holdings Ltd | 297,526 | 4.93 | 3.83 |
| CBI | Chicago Bridge & Iron Co | 296,714 | 4.92 | 7.13 |
| CNX | Consol Energy Inc | 290,173 | 4.81 | 12.93 |
| AER | AerCap Holdings NV | 280,854 | 4.66 | 3.72 |
| TWX | Time Warner Inc | 262,261 | 4.35 | 0.48 |
| GRBK | Green Brick Partners Inc | 261,204 | 4.33 | 49.41 |
| MU | Micron Technology Inc | 185,332 | 3.07 | 1.19 |
| ACM | Aecom | 177,974 | 2.95 | 4.27 |
| ON | ON Semiconductor Corp | 162,673 | 2.70 | 4.19 |
| BK | Bank of New York Mellon Corp | 156,600 | 2.60 | 0.37 |
| VOYA | Voya Financial Inc | 141,487 | 2.35 | 1.69 |
| SUNE | SunEdison Inc | 133,586 | 2.21 | 5.87 |
With the exception of SUNE, which reflects recent buying, the rest of these holdings are as of September 30. We should get updated numbers for the fourth quarter in a little over two weeks. (I should also mention that these are his long positions only; Einhorn also runs a short book, though those positions are not disclosed.)
But as of the most recent numbers we have, two stocks really jump off the page: Apple (AAPL) and General Motors (GM), which make up 21% and 8% of his long portfolio, respectively. [Disclosure: I am long both as well.]
Apple is taking a beating today after it gave disappointing guidance for the next quarter. Well, let me just say that I would be very surprised to see Einhorn dump Apple on that news. Einhorn is patient enough to see beyond the next quarter, and Apple has been priced as a no-growth company for a long time. Apple is one of the cheapest large stocks in America with a price/earnings ratio in the mid single digits once you strip out its gargantuan cash hoard. Fellow activist investor Carl Icahn, who also holds about 21% of his portfolio in Apple, has said publicly that he estimates Apple’s value at well over $200 per share. We’ll see. But I can say this: Given the low expectations built into Apple’s stock price right now, it wouldn’t much in the way of good news to send the shares up sharply.
If Apple drifts lower, I’d recommend backing up the truck to buy more.
I’m also bullish on General Motors. China is looking wobbly and there are valid concerns that last year’s banner year for car sales isn’t sustainable. But again, like Apple, GM has been priced as a no-growth stock for a long time. And at today’s prices, you’re picking up a nice 5% dividend.
I don’t know when valuation will matter again. The past year has been a nightmare for value investors, and 2016 isn’t getting off to a good start either. But by owning cheap stocks throwing off a high and rising dividend, you’re at least getting paid to be patient.
Charles Sizemore is the principal of Sizemore Capital, a wealth management firm in Dallas, Texas. As of this writing, he was long AAPL and GM.