"Tracking David Einhorn’s Portfolio – Q4 2016 Update"
"David Einhorn's US long portfolio value increased from $5.23B to $5.82B this quarter.Greenlight's long/short ratio is at 106% long and 81% short compared to 108% long and 80% short last quarter.Greenlight substantially increased General Motors while reducing Chemours and dropping Michael Kors.This article is part of a series that provides an ongoing analysis of the changes made to David Einhorn’s Greenlight Capital US long stock portfolio on a quarterly basis. It is based on Einhorn’s regulatory  filed on 02/14/2017. Please visit our  series for an idea on his investment philosophy and our  for the fund’s moves during Q3 2016.Greenlight Capital’s US long portfolio value stood at $5.82B this quarter. It is up ~11% compared to $5.23B as of last quarter. The long/short ratio shifted significantly to the long side in 2016: 106% long and 81% short - net exposure at 25% compared to 14% EOY2015. The top five holdings represent ~55% of the US long portfolio. The number of 13F stakes decreased from 35 to 31.Einhorn’s Q4 2016 letter reported that the fund returned 4.5% in the quarter. 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 ~16.1% annualized net-of-fees and expenses. To learn about David Einhorn and the perils of shorting, check-out his “”.New Stakes:Syngenta AG (SYT), Monsanto Company (MON), Alcoa Corporation (AA), and Fred’s Inc. (FRED): These are small new stakes established this quarter. The 1.26% SYT stake was purchased at prices between $75.50 and $88 and the stock is now at $85.36. The 0.74% MON position was established at prices between $98 and $108 and the stock currently trades just above that range at $109. AA is a very small 0.62% stake purchased at prices between $21 and $32 and it now goes for $36.21. The 0.48% FRED position was established at prices between $8 and $20 and the stock is now at $17.68.Note: 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.Stake Disposals:Michael Kors Holdings (KORS): KORS was a ~3% of the US long portfolio position established in Q2 2015 at prices between $42 and $66 and almost doubled the following quarter at prices between $38 and $45.50. Q4 2015 saw another 27% increase at prices between $38.50 and $44. Last three quarters had seen a two-thirds reduction at prices between $35.50 and $58.50 and the elimination this quarter was at prices between $42.50 and $52. The stock currently trades at $38.30.Note: Greenlight’s Q4 2016 investor letter had the following regarding KORS: potential global growth drivers disappointed and department store promotions in the US eroded pricing power at company owned stores thus prompting the exit. The position managed to generate a ~20% IRR.Take-Two Interactive (TTWO): TTWO was first purchased in Q4 2013 at prices between $18.50 and $22.50. The position was decreased by ~11% in Q2 2015 at prices between $23.50 and $29 and another 25% in Q4 2015 at prices between $28.50 and $36.50. The stake was again reduced by ~50% last quarter at prices between $38 and $46 and the disposal this quarter was at prices between $42 and $51. The stock currently trades at $59.69.Note: Greenlight’s Q4 2016 investor letter had the following on the TTWO exit: doubled money over a 3-year holding period - exited as sell-side estimates caught up with Greenlight’s own estimates.Aecom Technology (ACM): ACM was a ~1% stake first purchased in Q3 2014 at prices between $31.50 and $38 and more than doubled the following quarter at prices between $28 and $34. Q4 2015 saw a 50% reduction at prices between $27 and $32 and that was followed with another roughly one-third reduction last quarter at prices between $27.50 and $36. The remaining stake was sold this quarter at prices between $27 and $40. The stock currently trades at $37.75.Note: Greenlight’s Q4 2016 investor letter had the following on the ACM exit: revenue synergies with URS integration did not materialize and headwind due to declining O&G business. Greenlight generated a modest gain on the position.The Geo Group (GEO) and United States Steel (X): These were the two new positions last quarter. They were both exited this quarter. GEO was a minutely small 0.13% portfolio stake established at prices between $19.50 and $35 and exited at prices between $23 and $36. The stock is now at $45.14. X was a 1.11% position purchased at prices between $16 and $27.50 and exited at prices between $16.50 and $37.50. The stock is now at $39.80.ARRIS International plc (ARRS), Terraform Global (GLBL), and TerraForm Power (TERP): These are very small (less than ~1% of the US long portfolio each) stakes that were reduced last quarter and disposed of this quarter.Stake Increases:General Motors (GM): GM is Greenlight’s largest position at ~23% of the portfolio. The original stake was increased by ~55% in Q2 2015 at prices between $33 and $37.50 and another ~11% the following quarter at prices between $27 and $33.50. 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 this quarter thru the purchase of Calls as the underlying traded between $31 and $38. The stock currently trades at $37.22. For investors attempting to follow Einhorn, GM is a good option to consider for further research.Note 1: At the Great Investors’ Best Ideas Symposium last December, Einhorn made the following comment regarding GM valuation: “GM has a reasonable chance to earn its entire market cap probably before Tesla (TSLA) is able to earn its first year of annual profit.”Note 2: GM had a previous very successful roundtrip in the portfolio: 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.Apple Inc. (AAPL): AAPL is Einhorn’s second-largest position at ~12% of the US long portfolio. The stake was first purchased in the low-40s price-range in 2010. It has seen several profitable trades over the years. The six quarters thru Q2 2015 had seen a combined ~55% reduction at prices between $72 and $133. In Q3 2015, the pattern reversed: ~60% increase at prices between $103 and $132. Q4 2015 saw a ~50% reduction at prices between $105 and $123 while in Q1 2016 there was a ~30% increase at prices between $93 and $110. Last two quarters had seen a combined ~35% selling at prices between $90 and $116. The pattern reversed again this quarter: ~12% increase at prices between $106 and $118. The stock currently trades at $136.Mylan NV (MYL): MYL is a fairly large ~6% 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 last quarter at prices between $38 and $50. This quarter also saw a one-third increase at prices between $34 and $39. The stock is currently at $42.05.Note: The buy thesis projects an earnings expectation in the low-6s for 2018. This has come down from a previous expectation of $7 as of last quarter.Voya Financial (VOYA) previously ING US: The ~4% VOYA position was established in Q2 2013 at a cost-basis of $20.29. Q1 2016 saw a ~20% increase at prices between $26 and $37 and the following quarter saw another ~13% further increase at prices between $23 and $33.50. The stock currently trades at $41.90. There was a very minor ~5% further increase last quarter and that was followed with a ~15% increase this quarter at prices between $28.50 and $41.Rite Aid (RAD): RAD is a ~3% stake established in Q2 2016 at prices between $7.50 and $8.20 and increased by ~30% last quarter at prices between $6.85 and $8.21. This quarter saw another ~50% increase at prices between $6.50 and $8.50. The stock currently trades at $5.94. For investors attempting to follow Einhorn, RAD is a good option to consider for further research.Note: Walgreens Boots Alliance (WBA) was to acquire Rite Aid at $9 per share but last month the price was negotiated down to a $6.50 to $7 range.PVH Corporation (PVH): PVH is a ~1% of the US long portfolio position purchased in Q1 2016 at a cost-basis of $75.65. Last quarter saw a ~14% trimming at prices between $92 and $111 while this quarter saw a ~17% increase at prices between $90 and $114. It currently trades at $90.32.Note: Greenlight expects Calvin Klein’s growth in Europe and Tommy Hilfiger Chinese joint venture interest purchase to result in good earnings growth going forward.Stake Decreases:AerCap Holdings N.V. (AER): AER is a large (top three) ~9% 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% further increase at prices between $25.50 and $42. The stock currently trades at $46.65. There was marginal trimming this quarter.Note: Greenlight controls ~7% of AerCap Holdings.Time Warner Inc. (TWX): TWX is a large (top five) ~5.5% of the US long portfolio stake. It was established in Q4 2014 at a cost-basis of $72.72. Q4 2015 saw a ~70% increase at prices between $63.50 and $77.50. 2016 saw a combined ~50% reduction at prices between $62 and $96. The stock currently trades at $96.48.Consol Energy (CNX): CNX is a fairly large ~5% 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. Last three quarters have seen a ~50% combined reduction at prices between $11 and $22. The stock currently trades at $16.94.Note: Greenlight controls 6.7% of Consol Energy.Chemours Co. (CC):  CC is currently a 3.4% portfolio stake. It saw a ~85% increase in Q2 2016 at prices between $7 and $10.50. This quarter saw a ~45% selling at prices between $15 and $30. The stock is now at $33.06. Greenlight is harvesting huge gains.Note: Greenlight’s cost-basis on CC is $6.58. The buy thesis was based on earnings reaching ~$2 in 2017 and ~$3 in 2018. Greenlight also believes that the litigation threat is overstated.Gold Miner ETF (GDX): GDX stake is currently at ~3%. 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 $24.79. Last two quarters have seen marginal trimming.Note: Einhorn also has a large holding (top-five) in physical gold. He has a long-term bullish stance on gold.Yahoo Inc. (YHOO): The fairly large ~3% YHOO stake saw a huge ~120% stake increase in Q1 2016 at prices between $27 and $37. The stock is currently at $45.10. Last two quarters saw marginal trimming.Calpine Corporation (CPN): The ~2% CPN position was purchased in Q2 2016 at prices between $13.50 and $16 and almost doubled last quarter at prices between $12 and $15. The stock is now below those ranges at $11.47. This quarter saw minor trimming.Dillard’s (DDS): The ~2% 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. The stock is now at $58.39.  This quarter saw a ~9% trimming.Note: Greenlight controls ~6% of Dillard’s.IAC Interactive (IAC): IAC was a minutely small 0.30% of the US long portfolio position established in Q1 2013. In Q2 2013, the stake was substantially increased at prices between $43.50 and $51.50. The position has wavered since. Q2 2015 saw a ~37% reduction at prices between $67 and $81. The pattern reversed in Q4 2015: two-thirds increase at prices between $59 and $72. Q1 2016 saw another about-turn: ~55% reduction at prices between $40 and $60 and that was followed with another ~12% trimming in the following quarter. The stock currently trades at $75.38 and the stake is at ~1% of the US long portfolio.  This quarter also saw a ~8% trimming.Avangrid Inc. (AGR) previously UIL Holdings (UIL): AGR is a ~1% of the portfolio stake. It was established in Q1 2015 at prices between $31.50 and $41.50 and increased by ~90% the following quarter at prices between $35 and $41. 2016 saw a combined ~70% reduction at prices between $37.50 and $46.50. The stock currently trades at $40.91.Note: UIL merged with Iberdrola USA to form the new entity Avangrid which started trading last December 2015. UIL shareholders got $10.50 per share cash and one share of AGR for each UIL share held. The prices quoted above are adjusted for this.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 last quarter at prices between $20.50 and $26 and that was followed with another ~40% reduction this quarter at prices between $20 and $26. The stock currently trades at $21.46.Yelp Inc. (YELP):  YELP is a very small 0.57% of the portfolio stake established in Q1 2016 at a cost-basis of $21.16. Q2 2016 saw a ~10% trimming at prices between $19.50 and $30.50 and that was followed with another ~21% selling last quarter at prices between $29 and $42. There was another ~60% reduction this quarter at prices between $32 and $42. The stock is now at $34.67. Greenlight harvested short-term gains.Kept Steady: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.Liberty Global (LBTYA) (LBTYK): Liberty Global position accounts for 2.34% of the US long portfolio. Einhorn had a position in Virgin Media (VMED) from Q2 2012 onwards and the Liberty Global position was established as a result of the acquisition of VMED by Liberty Global. Last significant activity was in Q1 2016 when the stake saw a ~6% increase.Amerco (UHAL): The 1.40% of the portfolio UHAL stake was established in Q2 2016 at prices between $337 and $380 and increased by ~180% last quarter at prices between $321 and $397. The stock currently trades at $381.Tri Pointe Group (TPH): TPH is a very small 0.41% of the US long portfolio stake established in Q4 2014 at prices between $12.50 and $15.50. Last quarter saw a 54% reduction at prices between $12 and $14. The stock currently trades at $12.07.Note: TPH is a homebuilder with significant exposure to the California market. It had an IPO in February 2013 and trading started at ~$19 per share. In November 2013, Weyerhaeuser (WY) split-off its homebuilder subsidiary in a Reverse Morris Trust transaction with TPH.Quorum Health (QHC), Amaya Inc. (AYA), CNX Coal Resources LP (CNXC), Cigna Corporation (CI), and FMC Corporation (FMC): These are very small (less than ~1.5% of the US long portfolio each) stakes kept steady this quarter.Note: Quorum Health (QHC) is a spinoff from Community Health Systems (CYH) that started trading in April. 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 43% since the spinoff. Greenlight controls ~8.5% of Quorum Health.Per Greenlight’s Q4 2016 letter, the top disclosed long positions were AerCap, Apple, CONSOL Energy, General Motors, and gold. The letter also identified the winners and losers for the quarter: Long stakes in Chemours, General Motors, and Resona were winners while gold was a loser. Greenlight is short Netflix (NFLX), a bunch of oil frackers, and a bunch of industrial cyclicals including Caterpillar (CAT).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 Q4 2016:Form 3/4, 13D/G/A thru 11/21/2016: CNX - 8/15/2016 13G/A - 18.07M shares - 7.9% as of 8/5.: Q3 2016 return is 3.4%, YTD 3.8%. S&P500 3.9% & 7.8% respectively. Winners: AAPL - iPhone7 & speculation on foreign cash repatriation deal, Chemours (CC) - original cost-basis Q22016 new long - $6.58 - more than doubled - earnings should reach $2 by 2017 & $3 by 2018 and litigation threat is overstated, and CNX. Losers: Mostly in the short book - PXD (believes CEO claim that operating costs of $2 BOE is a massive lie) & others. Macro was flat.   NEW Longs: One medium-sized utility,  SHORT: Talked about CLR in a negative light but did not say whether they are short.  EXITS: VOD original 2009 stake - 20% compounded annual return. Evonik - small gain. Largest disclosed longs: AerCap, Apple, CONSOL Energy, General Motors and gold. Long/Short Ratio: 108% long and 80% short."