Behind the Money

Einhorn Buys Shares in American Icons GM, CBS

David Einhorn, who famously bet on the demise of Lehman Brothers, is betting on the comeback of two American icons: General Motors and CBS .

David Einhorn, president of Greenlight Capital Inc., speaks at the Value Investing Congress in New York.
Peter Foley/Bloomberg via Getty Images

The head of Greenlight Capital disclosed long positions in GM and CBS in his quarterly letter to investors, along with a new purchase of Marvell Technology  , a maker of hard disk drives. The hedge fundmanager also sold out of his long-time Pfizer stake and added to his long in the Market Vectors Gold Miners ETF .

“CBS stands to benefit from growing retransmission fees by cable operators for the right to carry CBS stations,” wrote Einhorn, in the letter dated Nov. 8. “CBS will also benefit from a broader recovery in advertising markets and what looks to be a big upcoming political cycle.”

On GM, Einhorn said: “The market appears focused on GM’s ‘legacy liabilities.’ However, the new GM does not have pension and healthcare liabilities that are likely to over-run the company.”

Shares of the so-called Tiffany network fell below $4 in 2009, but are now trading at around $25. Since emerging from bankruptcy last year and an IPO of its auto unit, General Motors shares are down 30 percent. Einhorn, as much a value buyer as he is a short-seller, said GM’s $33 billion in gross cash represents almost all of the company's market capitalization.

Greenlight Capital was basically little changed in the last quarter, according to the letter. Its three respective funds are all down about six percent on the year, net of fees.

“While the market had a broad decline with a lot of volatility, our conservatively positioned portfolio essentially went sideways with much lower volatility,” stated the letter. “Generally, our longs fell a bit more than the market, but our shorts fell even more and our macro investments helped mitigate the loss from being net long in a declining market.”

Einhorn had some biting comments for the executives at Green Mountain– a short position he unveiled at a conference last month -- as well as the sellside analysts that cover the maker of the Keurig home brewers. The hedge fund managers said analysts are ignoring “consistent reports of recent apparent misconduct” with regards to its capital spending practices and relationship ship with fulfillment partner, M. Block & Sons.

“It is perhaps GMCR’s non-response that has been most surprising,” Einhorn added. “It has remained silent since our presentation, citing a self-imposed, artificial ‘quiet period’ before it announces earnings.”

Einhorn sold Pfizer after holding it for two and a half years on concern about investigations into the drugmaker’s marketing practices. He called Marvell an overlooked value play, beaten down because of its relationship with Research In Motion.

The partnerships largest long positions at quarter end were Apple , gold, Market Vectors gold Miners, Microsoft and Vodafone Group .

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