David Einhorn's Greenlight Capital increased its bet on Sonos , with the hedge fund manager saying that the smart home sound system manufacturer has a "bright growth story." In a letter to investors obtained by CNBC, the Einhorn revealed that his firm expanded what was a small position in Sonos "to a size that makes it worthwhile to discuss." "We think that there is a long-term household penetration story here: SONO products are currently in approximately 11 million homes globally, a number that has grown by at least 20% in each of the last 4 years and stands to grow further as SONO adds more accessible price points, expands into new verticals, and introduces new products and services," Einhorn said in the letter. Shares of Sonos popped roughly 2% after Einhorn's disclosure, bringing its 2021 gains to about 42%. Greenlight owned 235,500 shares of Sonos — a position worth about $8 million — at the end of the second quarter, according to a regulatory filing. The size of the hedge fund's stake after the increase is unclear. "While we acknowledge that there are near-term headwinds in the form of supply chain disruptions and a cyclical normalization in consumer electronics demand, we think these will prove to be temporary distractions in an otherwise bright growth story," Einhorn said. "Between an elevated backlog of orders that will support demand well into the next year and strong pricing power, we see earnings growing close to 25% annually for the next few years." Greenlight has owned the stock for about a year, and Einhorn said he purchased the stake at an average price of $28.45 per share. Sonos shares ended the third quarter at $32.36 and last traded around $33.24. The Greenlight Capital funds lost 2.6% in the third quarter, compared with a 0.6% gain for the S & P 500, the hedge fund said in the letter. Its long portfolio declined 4.5% in the quarter, while shorts added 1.2% and macro added 1%.
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David Einhorn's Greenlight Capital increased its bet on Sonos