David Einhorn Positive on Marvell Technology (MRVL), Says Stock is Cheap

In his third-quarter letter to investors, David Einhorn said his Greenlight Capital hedge fund established a new position in Marvell Technology Group Ltd. (Nasdaq: MRVL).

Einhorn believes the Street is bearish on fears hard disk drives may eventually be replaced by flash memory (SSD) and its largest customer RIM (Nasdaq: RIMM) has been a structural losers.

Combating these fears, Einhorn said hard disk drives have shown no signs of disappearing any time soon. In addition, Marvell's position in the SSD storage market is at least as strong as its position in the hard disk drive market. In cell phones, Einhorn notes RIM has already declined sharply as a proposition of the company's sales and Marvell has offset these losses with growth from new customers.

At 6x 2012 earnings estimates and $4 per share in cash, shares of Marvell are "cheap", Einhorn contends.

Einhorn expects the company to buyback 12 percent of its stock this year and still have 30 percent of its market cap in cash.

The firm has established a position in Marvell at $13.35 per share.

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