"Tracking David Einhorn’s Portfolio – Q3 2017 Update"
"David Einhorn's US long portfolio value decreased from $6.20B to $5.86B this quarter.Greenlight's long/short ratio is at 118% long and 73% short compared to 111% long and 79% short last quarter.Greenlight decreased General Motors & Apple while increasing Tempur Sealy, Micron, Adient, and Hewlett Packard Enterprise.This article is part of a series that provides an ongoing analysis of the changes made to David Einhorn’s Greenlight Capital 13F portfolio on a quarterly basis. It is based on Einhorn’s regulatory  filed on 11/14/2017. Please visit our  series for an idea on his investment philosophy and our  for the fund’s moves during Q2 2017.Greenlight Capital’s US long portfolio value stood at $5.86B this quarter. It is down ~5% compared to $6.20B as of last quarter. The long/short ratio shifted further to the long side: 118% long and 73% short - net exposure at 45% compared to 25% at EOY2016. The top five holdings represent ~54% of the 13F portfolio. The number of stakes increased from 33 to 36.Einhorn’s Q3 2017 letter reported that the fund returned 3.3% YTD. This is compared to a gain of 14.2% for the S&P 500 Index. In 2016, they were up 8.4% compared to up 12% for the S&P 500 Index. Since inception in May 1996, the fund is up ~16% annualized net-of-fees and expenses.Their short book lost money again this quarter: Caterpillar (CAT), Amazon (AMZN), Tesla (TSLA), and Netflix (NFLX) shorts were disclosed as money losers. Also Best Buy (BBY) short was exited during the quarter at a loss. To learn about David Einhorn and the perils of shorting, check-out his “”.New Stakes:Exela Technologies (XELA), Venator Materials plc (VNTR), Tech Data Corp. (TECD), Childrens Place (PLCE), Gap Inc. (GPS), Dollar Tree (DLTR), and Kroger Co. (KR): These are very small (less than ~1% of the portfolio each) new positions established this quarter.Note 1: Venator Materials plc, a spinoff from Huntsman (HUN) started trading in August at ~$20.50 and currently goes for $22.21.Note 2: In July, Quinpario Acquisition (a SPAC that had an IPO in January 2015) merged with HOV LLC and Novitex Holdings (financial technology services provider) to form the new entity Exela Technologies.Stake Disposals:Calpine Corporation (CPN): CPN was a ~2.4% position purchased in Q2 2016 at prices between $13.50 and $16 and almost doubled the following quarter at prices between $12 and $15. The disposal this quarter was at prices between $13 and $15. They exited with a modest gain as CPN is getting acquired by the PE firm, Energy Capital Partners. Greenlight believes the buyer is getting the better deal.PVH Corporation (PVH): PVH was a very small 0.71% of the portfolio stake established in Q1 2016 at prices between $68 and $99 and sold out this quarter at prices between $111 and $130. The stock is currently at $127. Growth in Europe and Asia along with excellent brand management finally got recognized by the market, thus prompting the exit – the stock is up ~40% YTD.Alcoa Corporation (AA) and New York REIT (NYRT): These are very small (less than ~0.70% portfolio each) stakes disposed this quarter.Stake Increases:Mylan NV (MYL): MYL is a large (top five) 5.75% of the portfolio position established in Q4 2015 at a cost-basis of $45.32. Q2 2016 saw a ~70% increase at prices between $38.50 and $49 and that was followed with another ~30% increase in the following quarter at prices between $38 and $50. Q4 2016 also saw a one-third increase at prices between $34 and $39. Last quarter saw another ~23% increase at prices between $36.50 and $40. The stock currently trades near the low end of those ranges at $37.80. For investors attempting to follow Greenlight, MYL is a good option to consider for further research. There was a marginal increase this quarter.Note: Greenlight’s Q3 2017 partner letter discussed MYL: At $31.37, MYL trades at 7x this year’s and 6x next-year’s earnings. It is likely that from now on projections will be met. Also, the company’s pipeline of complex generics is promising.Tempur Sealy International (TPX): A very small 0.34% of the portfolio stake in TPX was purchased last quarter. This quarter saw a whopping 600% increase to a fairly large 4.40% portfolio position at a cost-basis of $56.11. The stock is now at $54.07.Note: Greenlight’s Q3 2017 partner letter discussed the holding: TPX shares fell sharply following the termination of a contract with Mattress Firm (21% of the business). Soon after, Greenlight started buying as they believed the lost business will be recaptured at higher margins eventually. Earnings should be north of $6 by 2019-20 compared to $4.05 consensus for 2019.Perrigo plc (PRGO): The ~4% PRGO position was purchased in Q1 2017 at prices between $66 and $87 and increased by ~50% last quarter at prices between $66 and $76.50. There was another ~15% stake increase this quarter. The stock is now at $85.80.Micron Technology (MU): MU is a 3.37% position purchased over the last three quarters at a cost-basis of $29.11. The stock is now at $45.36.Note 1: Greenlight’s Q3 2017 partner letter discussed the holding: the business is currently earning more than twice as much as the previous cycle peak. Also, structural improvements in the DRAM business is underappreciated (PPS ~$39.50 at the time).Note 2: In the 2013-15 timeframe, Greenlight had a successful roundtrip (mid-teens IRR) on Micron.Adient plc (ADNT) and Hewlett Packard Enterprise (HPE): These are very small positions established last quarter and increased significantly this quarter. ADNT is a ~2.5% portfolio stake that saw a ~300% increase this quarter at prices between $64 and $86. The stock is now at $74.27. The ~2% HPE position was purchased over the last two quarters at a cost-basis of $13.29. The stock currently trades at $13.16.Note: Greenlight’s Q3 2017 partner letter has the following on HPE: believes the company has earnings power in the $1.40-$1.70 range in the next few years (earnings depressed currently due to higher input costs & separation related expenses – has scope for cost reduction).DSW Inc. (DSW): DSW is a small ~1% of the portfolio position established in Q4 2015 at prices between $21.50 and $26.50 and increased by ~20% in Q2 2016 at prices between $19 and $28. There was a ~16% selling in Q3 2016 at prices between $20.50 and $26 and that was followed with another ~40% reduction the following quarter at prices between $20 and $26. Q2 2017 saw an about turn: ~50% increase in the last two quarters at prices between $15.50 and $21.50. The stock currently trades at $19.63.Stake Decreases:General Motors (GM): GM is Greenlight’s largest position at ~25% of the portfolio. The position was established during the first three quarters of 2015 at prices between $28.50 and $39. The three quarters thru Q2 2016 had also seen a combined ~22% increase at prices between $27 and $34. The position was more than doubled in Q4 2016 thru the purchase of Calls as the underlying traded between $31 and $38. The stake was almost doubled again in Q1 2017 at prices between $34 and $38.50. Last quarter saw a ~25% reduction (liquidated Calls) as the underlying traded between $32.50 and $35.50. This quarter saw another one-third selling at prices between $34.50 and $40.50. GM currently goes for $42.86.Note 1: In March, Greenlight proposed GM shares be split into two classes (one with dividend & the other without) but management rejected the plan. In response, Greenlight nominated three members to the board but GM shareholders rejected the proposal and the nominations in June.Note 2: Greenlight had a previous successful roundtrip with GM: A huge ~10% stake was disposed in Q1 2014 at an average exit price of $35.76 compared to an average entry price of $23.87.AerCap Holdings N.V. (AER): AER is a large (top three) 10.77% position. It was established in Q2 2014 at prices between $39 and $48. Q4 2014 thru Q3 2015 saw a combined ~270% increase at prices between $36.50 and $48.50. First three quarters of 2016 had also seen another ~70% increase at prices between $25.50 and $42. The stock currently trades just above those ranges at $49.75. There was marginal trimming this quarter.Note: Greenlight controls ~7% of AerCap Holdings.Consol Energy (CNX): CNX is a fairly large (top three) 6.55% stake purchased in Q3 2014 at prices between $36.50 and $46.  The position was increased by over 170% in the following quarter at prices between $32 and $41.50. H1 2015 saw an additional ~70% increase at prices between $22 and $34 and that was followed by another ~30% increase in Q3 2015 at prices between $9.50 and $22. The three quarters thru Q4 2016 had seen a ~50% combined reduction at prices between $11 and $22. The pattern reversed in Q1 2017: ~50% increase at prices between $14.90 and $19.50. The stock currently trades at $15.94. There was a marginal reduction this quarter. For investors attempting to follow Einhorn, CNX is a good option to consider for further research. Greenlight controls ~10% of Consol Energy.Note: Greenlight’s Q3 2017 partner letter discussed the holding: they think the coal separation should happen by EOY and expects the stock to move in anticipation. Also, the recently announced share repurchase plan should be a catalyst.Apple Inc. (AAPL): AAPL is a top five 5.77% position. The stake was first purchased in the low-40s price-range in 2010. It has seen several profitable trades over the years. Recent activity follow: Q1 2016 saw a ~30% increase at prices between $93 and $110. The next two quarters had seen a combined ~35% selling at prices between $90 and $116. The pattern reversed again in Q4 2016: ~12% increase at prices between $106 and $118. There was a roughly one-third reduction in Q1 2017 at prices between $116 and $144 and that was followed with a ~45% selling this quarter at prices between $143 and $164. The stock currently trades at $169.Dillard’s (DDS): The 1.43% DDS position had seen a ~40% increase in Q4 2015 at prices between $66 and $94. Q2 2016 saw a ~25% further increase at prices between $55.50 and $88. Last quarter saw another one-third increase at prices between $47 and $59.50. There was an about turn this quarter: ~40% reduction at prices between $54.50 and $79. The stock is now at $54.17.Note: Greenlight still controls ~6% of Dillard’s.Chemours Co. (CC):  CC is currently a 1.28% portfolio stake. Greenlight’s cost-basis on CC is $6.58.  The last four quarters have seen a combined ~90% reduction at prices between $15 and $52. The stock is now at $49.65. Greenlight is harvesting huge gains.Note: The original buy thesis was based on earnings reaching ~$2 in 2017 and ~$3 in 2018. Greenlight also believed that the litigation threat was overstated.Rite Aid (RAD): RAD is a 0.51% stake established in Q2 2016 at prices between $7.50 and $8.20 and increased by ~30% in Q3 2016 at prices between $6.85 and $8.21. Q4 2016 saw another ~50% increase at prices between $6.50 and $8.50. There was an about turn in Q1 2017: ~20% sold at prices between $4.25 and $8.70. The stock currently trades at $1.48. There was a ~9% trimming this quarter.Note: Walgreens Boots Alliance (WBA) was to acquire Rite Aid at $9 per share but in January the price was negotiated down to a $6.50 to $7 range. In June, WBA scrapped the merger and replaced it with a plan to buy half the stores from Rite Aid.Amerco (UHAL), Fred’s Inc. (FRED), and Quorum Health (QHC): These are very small (less than ~0.5% of the US long portfolio each) stakes reduced this quarter.Note: Quorum Health (QHC) is a spinoff from Community Health Systems (CYH) that started trading in April 2016. The terms called for CYH shareholders to receive one share for every four shares held. Greenlight had CYH shares for which they received QHC shares in that ratio. QHC is down ~70% since the spinoff.Kept Steady:Altaba Inc. (AABA) previously Yahoo: The 4.84% AABA stake saw a huge ~120% stake increase in Q1 2016 at prices between $27 and $37. The stock is currently at $69.43. H2 2016 had seen marginal trimming.Green Brick Partners (GRBK): The ~4% of the US long portfolio GRBK stake was acquired as a result of BioFuel Energy’s JGBL Builder Finance acquisition and rename transaction. The deal closed (October 2014) with Greenlight owning 49% of the business. David Einhorn was appointed Chairman of the Board following the transaction.Voya Financial (VOYA) previously ING US: The ~4% VOYA position was established in Q2 2013 at a cost-basis of $20.29. Last year saw a ~60% combined increase at prices between $24 and $41. The stock currently trades at $41.42.Gold Miner ETF (GDX): GDX stake is currently at 2.83%. It is a very long-term position that has wavered over the years. Last significant activity was a ~35% increase in Q4 2014 at prices between $16.50 and $22. The stock currently trades at $22.65.Note: Einhorn also has a large holding (top-five) in physical gold. He has a long-term bullish stance on gold.Conduent Inc. (CNDT): Conduent, the Xerox spinoff started trading last December at ~$16 and currently goes for $15.61. The ~1.6% position was established in Q1 2017 at prices between $13.25 and $17.25.Note: Conduent’s business is identical to Affiliated Computer Services which Xerox (XRX) had acquired in 2010.CNX Coal Resources LP (CNXC), The Stars Group (TSG) previously Amaya, Monsanto Company (MON), Tegna Inc. (TGNA), Varex Imaging (VREX), Cars.com (CARS), and Clipper Realty (CLPR): These are very small (less than ~1.5% of the US long portfolio each) stakes kept steady this quarter.Note 1: Greenlight controls ~35% of CNXC.Note 2: Last September, Bayer AG (BAYRY) agreed to buy Monsanto in a $128 per share all-cash deal. Greenlight has a large position in Bayer AG (native listed shares and so not in the 13F report). At the Robinhood Investor Conference last November, Bayer AG was Einhorn’s stock pick.Note 3: Cars.com is a spinoff from Tegna that started trading in June at ~$24.50 and currently goes for $23.29. Varex Imaging is a spinoff from Varian Medical Systems (VAR) that started trading at ~$27 in January and currently goes for 35.34. Clipper Realty, the New York focused residential REIT had an IPO in February at ~$13.50 per share. The stock is currently at $9.65.Per Greenlight’s Q3 2017 letter, the top disclosed long positions were AerCap, Bayer, CONSOL Energy, General Motors, and gold. In addition to partner stakes, the fund also invests the float of Greenlight Capital RE (GLRE). The spreadsheet below highlights changes to Greenlight’s US stock holdings in Q3 2017:Regulatory Filings thru 8/15/2017: Form 3, 4 – 6/8/2017 – DDS – very small disposals at $51.5 & 10% ownership related filing.: 7/14/2017 - Q2 2017 return is (4.0)% and YTD (2.8%) compared to S&P 500’s 3.1% & 9.3% respectively- ~16% annualized since May 1996 inception. The five largest long holdings all reported earnings that exceeded expectations while the shorts announced earnings that mostly disappointed - Greenlight still lost money - Macro was also a drag. Winners: the long book was marginally profitable - no big winners. Losers: short book lost, especially the bubble basket. NEW Longs: Toshiba added at 234.79 yen - believes it is worth ~400 - uncertainties surrounding Westinghouse bankruptcy.  SHORT: AMZN, ATHN, TSLA, NFLX - all in the bubble basket and lost significant money. CAT outside of the bubble basket also lost money. CLR was the only material winner while TSLA was the only material loser.  EXITS: Altice (second exit with a nice gain - entered after cablevision acquisition when the stock tanked and waited for the rebound), IACI (gain - sum-of-parts discount thesis played out), Liberty Global (Originally Virgin Media position from 2012 - nice return & IRR - exited as they saw operating weakness), Time Warner (three year successful investment - AT&T buyout), Decade-long short of credit rating agencies (exited at a loss - believed regulation to make them accountable after the 2008 debacle in financials never materialized). Mallinckrodt (successful short after they acquired Questcor which was one of Greenlight’s shorts at the time),   Largest disclosed longs: AerCap (17% BV increase to $51.20, Moody’s upgrade, buyback - yet stock up only ~1%) , Bayer (up 5% - damper due to one-time Brazil issues), CONSOL Energy (raised guidance 7% and production forecast without raising capital spending - despite this, stock lost 11% to $14.93 - still think business is worth much more), General Motors (fell 1% to $34.93 despite a 15% beat in earnings - thinks market is overestimating the firm’s vulnerability to the next down-turn), and Gold. MYL ($5.15-$5.50 earnings guidance reaffirmed and beat earnings by a penny - stock languishing at 7x earnings at $38.82) Long/Short Ratio: 111% long and 79% short. The partnership is closed for new investments - they were opened only three times in the last ten years."