Einhorn's Greenlight Bets On Xerox, Dell; Closes First Solar Short
January 18 2012 - 2:17PM
Dow Jones News
David Einhorn's Greenlight Capital Inc. bought Xerox Corp. (XRX)
and Dell Inc. (DELL) shares during the fourth quarter and cashed in
its bet against First Solar Inc. (FSLR), delivering returns that
helped it eke out modest gains for the year.
The hedge fund manager, famous for his criticism of Lehman
Brothers just before its collapse, said in his quarterly letter to
shareholders he "found very few places to make money" but "kept
mistakes to a minimum" in 2011, a year that industry adviser
Hennessee Group LLC said was the worst since 2008.
"Never has so much work gone into making 2%," Einhorn said in
the letter. "For all its ups and downs, dramatic headlines, and
extremely high daily volatility, the market ended the year just
about where it started."
In 2011, Greenlight Capital LP returned 2.9%. Two other hedge
funds, Greenlight Capital Qualified LP and Greenlight Capital
Offshore, returned 2.7% and 1.9%, respectively.
In the same period, the Hennessee Hedge Fund Index, a benchmark
for the sector, dropped 4.27%.
Greenlight was impressed by Dell buying back shares last year
while its valuation was relatively low, as well as the company's
effort to broaden its offerings beyond personal computers,
according to the letter. Einhorn noted Xerox's stock repurchasing
and its success securing technology outsourcing contracts.
Among companies in which Greenlight had short positions, Green
Mountain Coffee Roasters Inc. (GMCR) and First Solar were the "two
significant winners" in the latest quarter, the letter said. Short
sellers borrow stock and then sell it, betting that the price of
the shares will fall and they can buy them back at a lower price
for return to the lender.
In October, Einhorn delivered a 110-slide presentation outlining
his concerns about the health of Green Mountain. The company's
stock plunged in the wake of his critique, which questioned the
company's accounting, transparency and business practices.
Greenlight closed its short position in First Solar, "one of the
most profitable shorts in the history" of its funds, the letter
said. It also exited a bet against Diamond Foods Inc. (DMND), the
Pringles snacks maker whose $1.5 billion purchase by Procter &
Gamble Co. (PG) has been held up by an accounting
investigation.
Some of the letter's content was reported earlier by CNBC.
-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240;
matthew.jarzemsky@dowjones.com
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