"Tracking David Einhorn’s Portfolio – Q1 2018 Update"
"David Einhorn's 13F stock portfolio value decreased from $5.5B to $3.99B this quarter.Greenlight's long/short ratio is at 111% long and 82% short compared to 107% long and 66% short last quarter.Greenlight decreased Apple and AerCap Holdings while doubling Ensco plc.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 05/15/2018. Please visit our  series for an idea on his investment philosophy and our  for the fund’s moves during Q4 2017.Greenlight Capital’s 13F portfolio value stood at $3.99B this quarter. It is down ~28% compared to $5.5B as of last quarter – they decreased/dropped several positions during the quarter. The long/short ratio shifted to the short side: 111% long and 82% short – net exposure at 29% compared to 41% as of Q4 2017. The top five holdings represent ~58% of the 13F portfolio. The number of stakes decreased from 43 to 35.Einhorn’s Q1 2018 letter reported that the fund returned negative 13.6% for the quarter. This is compared to negative 0.8% for the S&P 500 Index. Extreme outperformance of growth over value was quoted as a reason for the large underperformance this quarter.Despite losing money last year, Greenlight still maintains a hefty short book. To learn about David Einhorn and the perils of shorting, check-out his “”.Note: In the Sohn Conference last month, Einhorn disclosed they are short Assured Guaranty (AGO). Short positions in Hexagon AB & United Rentals (URI) were closed at losses during the quarter.New Stakes:IAC/InteractiveCorp (IAC): IAC is a small ~1% of the portfolio stake established this quarter at prices between $129 and $165 and the stock currently trades at ~$149.Note: IAC is back in the portfolio after a six-month gap: a long-term stake from Q1 2013 was disposed in Q2 2017 at substantial gains.Tapestry Inc. (TPR), Bloomin’ Brands (BLMN), Abercombie & Fitch (ANF), PayPal Holdings (PYPL), Urban Outfitters (URBN), Sprouts Farmers Markets (SFM), Office Depot (ODP), and Roku Inc. (ROKU): These are minutely small (less than 0.15% of the portfolio each) positions established during the quarter.Stake Disposals:Chemours Co. (CC):  CC was a ~1% portfolio stake as of last quarter. The last five quarters had seen the position sold down by ~94% at prices between $15 and $57. The elimination this quarter was at prices between $44.50 and $54.50. The stock is now at $51.79. Greenlight harvested huge gains.Note: The average exit price was $31.62 compared to average entry price of $6.97. The original buy thesis (Q4 2015) was based on earnings reaching ~$3 in 2018. Greenlight also believed that the litigation threat was overstated.Childrens Place (PLCE), Gap Inc. (GPS), and Varex Imaging (VREX): These minutely small (less than ~0.2% of the portfolio each) positions were reduced last quarter and eliminated this quarter.Note: Varex Imaging is a spinoff from Varian Medical Systems (VAR) that started trading at ~$27 in January 2017 and currently goes for $37.88.Best Buy Inc. (BBY), Carter Inc. (CRI), Kohl’s Corp. (KSS), Lowes Companies (LOW), Michael Kors (KORS), Nordstrom Inc. (JWM), JC Penney (JCP), SeaWorld Entertainment (SEAS), Shutterfly Inc. (SFLY), Signet Jewelers (SIG), Under Armour (UAA), Wayfair Inc. (W), and Weight Watchers International (WTW): These are minutely small (less than 0.5% of the portfolio each) stakes established last quarter but disposed this quarter.Stake Increases:Brighthouse Financial (BHF): BHF is a large (top three) ~14% portfolio stake established in Q3 2017 and increased by ~60% last quarter at an overall cost-basis of $57.92. The stock is currently below that at $47.70. For investors attempting to follow Greenlight, BHF is a good option to consider for further research. There was a marginal increase this quarter.Note: BHF is a spinoff of MetLife’s (MET) U.S. Retail business (annuities and life insurance) that started trading in July last year.Ensco plc (ESV): ESV is now a 2.20% portfolio position. It was established last quarter at a cost-basis of $5.72. There was a stake doubling this quarter at prices between $4.34 and $7.43 and the stock is now at $7.17.Five Below (FIVE): FIVE is a minutely small 0.13% portfolio stake established last quarter and increased by ~60% this quarter.Stake Decreases:General Motors (GM): GM is Greenlight’s largest position at ~21% 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. The following quarter saw a ~25% reduction (liquidated Calls) as the underlying traded between $32.50 and $35.50. Q3 2017 saw another one-third selling at prices between $34.50 and $40.50 and that was followed with a similar reduction last quarter at prices between $40.50 and $46.50. GM currently goes for $38.28. There was a ~13% trimming this quarter.Note 1: In March 2017, 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) 8.33% 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. Last quarter saw a ~20% selling at prices between $49.75 and $53 and that was followed with a one-third selling this quarter at prices between $49 and $55. The stock currently trades at $55.36.Note: Greenlight controls ~4.5% of AerCap Holdings.Mylan NV (MYL): MYL is a large (top five) ~8% 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. Q2 2017 saw another ~23% increase at prices between $36.50 and $40. The stock currently trades at $39.21. There was a ~25% selling this quarter at prices between $38.50 and $47.50.Voya Financial (VOYA) previously ING US: The fairly large ~5% 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 $53.98. There was a ~4% trimming last quarter and that was followed with a one-third selling this quarter at prices between $46.50 and $54.50.Perrigo plc (PRGO): The ~4.7% PRGO position was purchased in Q1 2017 at prices between $66 and $87 and increased by ~50% the following quarter at prices between $66 and $76.50. There was another ~15% stake increase in Q3 2017. The stock is now at $75.97. This quarter saw a ~20% selling at prices between $80 and $95.Micron Technology (MU): MU is a 4.37% position purchased over the first three quarters of 2017 at a cost-basis of $29.11. Last quarter saw a one-third selling at prices between $39 and $50. The stock is now at $59.03. There was a marginal reduction this quarter.Note: In the 2013-15 timeframe, Greenlight had a successful roundtrip (mid-teens IRR) on Micron.CNX Resources (CNX) previously Consol Energy: CNX is a fairly large ~4% stake purchased in Q3 2014 and built up over the next several quarters. The three quarters thru Q4 2016 had seen a ~50% combined reduction at prices between $8 and $19. The pattern reversed in Q1 2017: ~50% increase at prices between $12 and $16.50. The stock currently trades at $16.15. There was a ~40% selling this quarter at prices between $11.70 and $17.90. Greenlight controls ~4.9% of CNX Resources.Note: The prices quoted above are adjusted for the coal spinoff (Consol Energy – CEIX) in November 2017.Altaba Inc. (AABA) previously Yahoo: The 3.27% AABA stake saw a huge ~120% stake increase in Q1 2016 at prices between $27 and $37. The stock is currently at $76.51. Last quarter saw a ~50% reduction at prices between $65.40 and $73 and that was followed with a ~20% selling this quarter at prices between $69 and $80. Greenlight realized huge gains.Apple Inc. (AAPL): AAPL is a 2.64% position 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 in Q3 2017 at prices between $143 and $164. This quarter saw another ~70% reduction at prices between $155 and $182. The stock currently trades at $187.Twitter Inc. (TWTR): The 1.82% TWTR position was purchased last quarter at an average cost of $21.59. The position saw a ~10% trimming this quarter. The stock is now at $32.86. Greenlight is starting to harvest gains.Conduent Inc. (CNDT): Conduent, the Xerox spinoff started trading in December 2016 at ~$16 and currently goes for $19.29. The 1.80% position was established in Q1 2017 at prices between $13.25 and $17.25. Last quarter saw a ~27% selling at prices between $15.05 and $16.30 and that was followed with a ~10% trimming this quarter.Note: Conduent’s business is identical to Affiliated Computer Services which Xerox (XRX) had acquired in 2010.Adient plc (ADNT): ADNT is a ~1.77% portfolio stake that saw a ~300% increase in Q3 2017 at prices between $64 and $86. The stock is now at $56.24. There was a roughly one-third selling this quarter at prices between $57.50 and $84.Tempur Sealy International (TPX): A very small 0.34% of the portfolio stake in TPX was purchased in Q2 2017. The following quarter saw a whopping 600% increase to a fairly large position at a cost-basis of $56.11. Last quarter saw a ~30% selling at prices between $51 and $68 and that was followed with a ~70% reduction this quarter at prices between $44 and $64.50. The stock is at $49.15 and the stake is now very small at ~1% of the portfolio.Consol Energy (CEIX): CEIX is a 0.85% portfolio position that came about as a result of the coal spinoff from CNX Resources (one share of the newly issued Consol Energy shares for every 8 shares held). Trading started last November at ~$23 and the stock is now at $43.59. There was a ~50% reduction this quarter at prices between $28 and $38.50.Clipper Realty (CLPR), DSW Inc. (DSW), Dillard’s (DDS), and Venator Materials plc (VNTR): These very small (less than ~1% of the portfolio each) positions saw reductions this quarter.Note 1: Clipper Realty, the New York focused residential REIT had an IPO in February 2017 at ~$13.50 per share. The stock is currently at $8.85.Note 2: Venator Materials plc, a spinoff from Huntsman (HUN) started trading in August 2017 at ~$20.50 and currently goes for $18.12.Kept Steady:Green Brick Partners (GRBK): The ~7% of the 13F 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.Consol Coal Resources LP (CCR), Exela Technologies (XELA), Medicines Company (MDCO), and Time Warner (TWX): These are very small (less than ~2% of the portfolio each) positions kept steady this quarter.Note 1: Greenlight controls ~35% of CCR.Note 2: In July 2017, Quinpario Acquisition (a SPAC that had an IPO in January 2015) merged with HOV LLC and Novitex Holdings (financial technology services provider) to form Exela Technologies. Greenlight has a 5.6% ownership stake in Exela.Per Greenlight’s Q1 2018 letter, the top disclosed long positions were AerCap, Bayer, Brighthouse Financial, 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 13F stock holdings in Q1 2018:11/28/2017 - Consol Energy – Coal Separation - Details from the  follow: “Under the terms of the separation, on November 28, 2017, the Company's stockholders received a distribution of one share of common stock of the newly named CONSOL Energy for every 8 shares of the Company's common stock held as of the close of business on the record date of November 15, 2017. No fractional shares of CONSOL Energy were issued and stockholders received cash in lieu of fractional shares. The Company's stockholders retained their shares of Company common stock, but as a result of the name change, these shares now represent shares of CNX Resources Corporation. In connection with the distribution, the Company changed its name from CONSOL Energy Inc. to CNX Resources Corporation and retained its ticker symbol "CNX" on the New York Stock Exchange.  At the same time, the newly formed CONSOL Mining Corporation changed its name to CONSOL Energy Inc. and its common stock begins trading today on the New York Stock Exchange under the ticker symbol "CEIX".”Regulatory Filings thru 2/15/2018: 13G & 13G/As – 2/14/2018 – CNX - 17.8M shares – 7.7% of business, AER – 9.8M shares – 6.2% of business, DDS – 806K shares – 3.3% of business, TPX – 2.82M shares – 5.2% of business, XELA – 8.4M shares – 5.6% of business, BHF – 11M shares – 9.2% of business, CEIX – 2.23M shares – 8% of business.: Q4 2017 return is (1.6)% and 1.6% for the year compared to 6.6% and 21.8% for the S&P – 15.4% annualized since May 1996 inception – longs moderately underperformed while shorts moderately outperformed. Bubble basket shorts – AMZN, TSLA, NFLX – biggest losers for the year along with Caterpillar (CAT), athenahealth, & Continental Resources (CLR)  shorts. Winners & Losers – GM,, Uniper, & CC were the biggest winners. Commentary: GM – underpromised & overdelivered (2017 earnings expected rose from $5.76 to $6.30). performed inline with the market but shares remain inexpensive at 7x consensus 2018 earnings which they expect to exceed by a wide margin – more so when considering investments in future auto technologies (electric, autonomous TaaS, fleet mgmt.. & connectivity), UN01 – takeover rumors (E.on) & improved results resulted in the stock doubling from 13 Euros to 26 Euros, CC – moved from $22 to $50 based on earnings vastly exceeding expectations. MYL - $42.31 – biggest winner in the quarter - trades at 7.7x 2018 earnings expectation – generic copraxone approval highlighted their strength in complex generics pipeline – more approvals expected in the coming months, CNX – second biggest winner for the quarter – CNX (natural gas – renamed) still trades at less than 6x 2018 EBITDA while CEIX (coal spinoff) is at 5x – both have high quality resource positions, first quartile cost-structures & strong management, NEW LONGS: BHF – cost-basis $57.92 – top-three position - most of MetLife’s U.S. Retail business, selling annuities and life insurance - very conservative capitalization and high risk-based capital levels - base expectation calls for no capital return till 2020 - trades at 56% of BV & 6.4x 2018 EPS. ESV – small position at cost-basis $5.72 - ESV trades at 4x EBITDA and 2.5x free cash flow on our mid-cycle estimates. TWX – cost-basis $89.72 - undervalued even if deal falls thru - same EV as NFLX despite TWX having a better library, an exciting content creation engine and substantial current profitability. TWTR – small position at $21.59 -  EV at 2% of FB – restructuring & user experience improvements should start to pay in 2018 - expects to decrease the 25% margin gap with peers. EXITS: GDX – exited at a loss – still holds physicial gold – decided not to have additional exposure to miners. HPE – purchased at $13.29 & exited at small gain – CEO left and memory prices might affect profitability. ISS – entered in 2014 at DKK 166.75 & exited at 250.60 – margin improvements appear to have run its course. RAD – entered at $7.45 and exited at $2.78 – expected deal to close but did not happen – also operating results deteriorated. DE Short – closed at a loss. Largest Disclosed Longs: AerCap, Bayer, Brighthouse Financial, General Motors and gold. Long/Short Ratio: The Partnerships had an average exposure of 107% long and 66% short."