"Tracking David Einhorn’s Portfolio – Q2 2017 Update"
"David Einhorn's US long portfolio value decreased from $7.19B to $6.20B this quarter.Greenlight's long/short ratio is at 111% long and 79% short compared to 108% long and 80% short last quarter.Greenlight dropped Time Warner and Liberty Global while increasing Mylan, Perrigo, Dillard’s and Micron Technology.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 08/14/2017. Please visit our  series for an idea on his investment philosophy and our  for the fund’s moves during Q1 2017.Greenlight Capital’s US long portfolio value stood at $6.20B this quarter. It is down ~14% compared to $7.19B as of last quarter. The long/short ratio shifted to the long side: 111% long and 79% short - net exposure at 32% compared to 25% at EOY2016. The top five holdings represent ~62% of the US long portfolio. The number of 13F stakes decreased from 35 to 33.Einhorn’s Q2 2017 letter reported that the fund had lost 2.8% YTD. This is compared to a gain of 9.3% 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. To learn about David Einhorn and the perils of shorting, check-out his “”.New Stakes:Adient plc (ADNT), Cars.com (CARS), Hewlett Packard Enterprise (HPE), New York REIT (NYRT), Tegna Inc. (TGNA), and Tempur Sealy International (TPX): These are very small (less than ~1% of the portfolio each) positions established this quarter.Note: HPE completed the spin-merger of its Enterprise Service segment (the acquired EDS unit along with their legacy services businesses) with CSC to form DXC Technology (DXC) and that transaction closed on April 1st.  Cars.com is a spinoff from Tegna that started trading on June 1st.Stake Disposals:Time Warner Inc. (TWX): TWX was a ~3% of the US long portfolio stake as of last quarter. 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 and that was followed with a ~40% selling last quarter at prices between $93 and $99. The disposal this quarter was at prices between $97 and $100. The stock currently trades at $102. Greenlight harvested gains.Note: In October last year, AT&T (T) agreed to acquire Time Warner in a cash-and-stock deal (50% cash) valued at $107.50 per share.Liberty Global (LBTYA) (LBTYK): The 2.23% position was eliminated this quarter at prices between $28 and $35. 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.Note: Greenlight’s Q2 2017 letter mentioned that LBTYK stake had a nice long-term IRR. They exited as they saw operational weakness.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. Last two quarters had also seen another one-third reduction at prices between $57 and $77. The disposal this quarter was at prices between $74 and $108. The stock is now at $105. Greenlight harvested long-term gains.Alere Inc. (ALR), Cigna Corporation (CI), FMC Corporation (FMC), Syngenta AG (SYT), and Tri Pointe Group (TPH): These are very small (less than ~1% of the US long portfolio each) stakes dropped this quarter.Stake Increases:Mylan NV (MYL): MYL is a fairly large (top five) 6.7% 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. This quarter saw another ~23% increase at prices between $36.50 and $40. The stock currently trades well below those ranges at $30.13. For investors attempting to follow Greenlight, MYL is a good option to consider for further research.Perrigo plc (PRGO): The ~3% PRGO position was purchased last quarter at prices between $66 and $87 and increased by ~50% this quarter at prices between $66 and $76.50. The stock is now at $77.77.Note 1: Perrigo plc has had a previous round-trip in the portfolio: a very small stake purchased in Q2 2016 was disposed of the following quarter.Dillard’s (DDS): The 2.34% 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. This quarter saw another one-third increase at prices between $47 and $59.50. The stock is now at $57.17.Note: Greenlight controls ~10% of Dillard’s.Micron Technology (MU): MU is a 1.28% position purchased last quarter at prices between $21.50 and $29 and increased by roughly two-thirds this quarter at prices between $26.50 and $32.50. The stock is now at $29.68.Note: MU has had a previous successful roundtrip in the portfolio in the 2013-2015 timeframe.DSW Inc. (DSW): DSW is a small 0.64% 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. This quarter saw a ~11% increase. The stock currently trades at $16.08.Stake Decreases:General Motors (GM): GM is Greenlight’s largest position at ~31% 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 last quarter at prices between $34 and $38.50. The Calls were eliminated (~25% nominal reduction) this quarter as the underlying traded between $32.50 and $35.50. GM currently goes for $35.54.Note 1: Greenlight controls ~3.8% of General Motors.Note 2: 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 3: 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.Apple Inc. (AAPL): AAPL is Einhorn’s third-largest position at ~9% 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. 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 last quarter at prices between $116 and $144 and that was followed with marginal trimming this quarter. The stock currently trades at $162.Chemours Co. (CC):  CC is currently a ~2.2% portfolio stake. It saw a ~85% increase in Q2 2016 at prices between $7 and $10.50. Q4 2016 saw a ~45% selling at prices between $15 and $30 and that was followed with another ~45% reduction last quarter at prices between $21 and $39. There was another ~30% selling this quarter at prices between $35 and $45.50. The stock is now at $46.90. 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 believed that the litigation threat is overstated.Fred’s Inc. (FRED), Monsanto Company (MON), PVH Corporation (PVH), and Quorum Health (QHC): These are very small (less than ~1% of the US long portfolio each) stakes reduced this quarter.Note 1: 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 2: 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 ~75% since the spinoff.Kept Steady:AerCap Holdings N.V. (AER): AER is a large (top three) 9.33% 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 $48.55.Note: Greenlight controls ~7% of AerCap Holdings.Consol Energy (CNX): CNX is a fairly large (top five) 5.46% 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 last quarter: ~50% increase at prices between $14.90 and $19.50. The stock currently trades at $14.52. For investors attempting to follow Einhorn, CNX is a good option to consider for further research.Note: Greenlight controls ~10% of Consol Energy.Green Brick Partners (GRBK): The 4.46% 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.Altaba Inc. (AABA) previously Yahoo: The 3.76% AABA stake saw a huge ~120% stake increase in Q1 2016 at prices between $27 and $37. The stock is currently at $59.99. H2 2016 had seen marginal trimming.Voya Financial (VOYA) previously ING US: The 3.52% 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 $38.90. There was a very minor ~5% further increase in Q3 2016 and that was followed with a ~15% increase in Q4 2016 at prices between $28.50 and $41.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. H2 2016 had seen marginal trimming. The stock currently trades at $22.56.Note: Einhorn also has a large holding (top-five) in physical gold. He has a long-term bullish stance on gold.Calpine Corporation (CPN): The 2.39% CPN position was purchased in Q2 2016 at prices between $13.50 and $16 and almost doubled the following quarter at prices between $12 and $15. The stock is now at $13.91.Conduent Inc. (CNDT): Conduent, the Xerox spinoff started trading last December at ~$16 and currently goes for $16.82. The position was established last quarter at prices between $13.25 and $17.25.Note 1: Conduent’s business is identical to Affiliated Computer Services which Xerox (XRX) had acquired in 2010.Note 2: Greenlight had a fairly large ~3% portfolio stake in Xerox: it was purchased in 2011 in the low-7s and disposed of in 2013 in the mid-8s.Amerco (UHAL): The 1.30% of the portfolio UHAL stake was established in Q2 2016 at prices between $337 and $380 and increased by ~180% the following quarter at prices between $321 and $397. The stock currently trades at $376.Rite Aid (RAD): RAD is a 0.80% 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 last quarter: ~20% sold at prices between $4.25 and $8.70. The stock currently trades at $2.31.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.Alcoa Corporation (AA), The Stars Group (TSG) previously Amaya, CNX Coal Resources LP (CNXC), Clipper Realty (CLPR), and Varex Imaging (VREX): These are very small (less than ~1.5% of the US long portfolio each) stakes kept steady this quarter.Note 1: Varex Imaging is a spinoff from Varian Medical Systems (VAR) that started trading at ~$27 in January and currently goes for ~$29.33.Note 2: Clipper Realty, the New York focused residential REIT had an IPO in February at ~$13.50 per share. The stock is currently at $10.41.Per Greenlight’s Q2 2017 letter, the top disclosed long positions were AerCap, Bayer, CONSOL Energy, General Motors, and gold. Toshiba (TOSBF) (TOSYY) was identified as a new long position in the native market at a cost-basis of 234.79 yen (currently at ~300, believes fair value is ~400). The letter also identified the following as having lost money: Short positions in Tesla (TSLA), Amazon (AMZN), Athenahealth (ATHN), Netflix (NFLX), Caterpillar (CAT), and the decade long short of credit rating agencies (MCO) (SPGI). The short position in credit rating agencies was exited during the quarter.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 Q2 2017:Regulatory Filings thru 5/16/2017: None.: Q1 2017 return is 1.3% compared to S&P 500’s 6.1% - ~16% annualized since May 1996 inception. Longs gained but lagged S&P while the shorts lost while generating alpha. Winners: AAPL, CC, and Gold. Losers: bubble basket, RAD (trimmed this quarter), and the short Tesla stake. NEW Longs: three small new stakes - PRGO, CNDT the Xerox spinoff, and a European Financial stock.  SHORT: difficult time to short the bubble basket and TESLA - estimates are falling & they are missing expectations but the stocks are rising - the bubble will pop but timing is uncertain.  EXITS: three Canadian bank stock shorts (losses - oil & gas credit loss thesis did not sufficiently materialize), LYB short (loss - their thesis that new capacity would kill margins was slow to materialize), RPC short (small loss - favorable industry tailwinds offset their company-specific short thesis). SIG (gain - negative comps & class action caused the stock to fall).  Largest disclosed longs: AerCap, Bayer, CONSOL Energy, General Motors (accused management of misrepresenting their proposal to credit rating agencies - getting ready for a proxy fight - nominated 4 to the board), and Gold. Long/Short Ratio: 108% long and 80% short.4/12/2017: Greenlight capital  to the GM board. They also identified GM as their largest individual stock position in their quarterly conference call on May 3rd.3/28/2017: SA  says Einhorn asked for two classes for GM shares (one with dividend & the other without) but the proposal was rejected."