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David Einhorn: Some Stocks Too Cheap, Even if Trouble Awaits

Are some stocks just too cheap? That was the chatter on the floor Wednesday after the latest move from widely followed investor David Einhorn

In a note to investors the billionaire hedge fund manager said, “Our current strategy is to own cheap stocks of good businesses, largely in the United States.”

Einhorn also said, “We are more net long equities than we have been in some time, as we believe that many stocks have reached a point where they are simply cheap enough to own even if some trouble awaits us.”

Given the current environment, what specific stocks does Einhorn want to own? - Dell and Xerox.

"We established our position (in Dell) at an average price of $15.33," he writes, "recent business performance has exceeded recent stock performance."

Looking at Xerox, Einhorn says he re-established a position at $7.61 a share citing new multi-year outsourcing contracts inked by the company.

If Einhorn is bullish, should you be too?

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NEW SLIDESHOW: The Biggest Momentum Stocks of 2011: Buy or Sell?

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Largely the Fast Money traders says yes. “I always listen to David Einhorn,” reveals Fast trader Tim Seymour.

“You can’t ignore what he says,” adds Karen Finerman. “He’s a superb investor.”

“Xerox could have significant upside,” adds Joe Terranova.

However if you’re inclined to follow Einhorn the Fast Money pros add that he’s renowned for longer time horizons. “That’s the thing,” adds Finerman. “It’s a bet over time. Will it play out over the next quarter? I don’t know.”

And Jon Najarian adds a caveat; although these positions were revealed in a note to investors, DocJ says don’t follow Einhorn blindly. It may look like he’s buying when he’s really covering a short position.






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Trader disclosure: On Jan 18, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders Terranova is long V; Terranova is long CSCO; Terranova is long TRLG; Terranova is long JNPR; Terranova is long DECK; Terranova is long NFLX; Terranova is long XOM; Terranova is long SBUX; Terranova is long AXP; Terranova is long EMC; Terranova is long MUB; Terranova is long IBM; Terranova is long UNG April $5 puts; Finerman owns AAPL; Finerman owns BAC; Finerman owns JPM; Finerman owns IBM; Finerman owns MSFT; Najarian is long AAPL; Najarian is long GS; Najarian is long LLTC; Najarian is long KBH; Najarian is long CQB; Najarian is long EMC; Najarian is long CREE; Najarian is long FCX

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