Einhorn Adds to Apple (AAPL) Position

May 7, 2013 9:24 AM EDT
(Updated - May 7, 2013 10:53 AM EDT)

Following a 17% decline in the position in the first quarter, speaking on the Greenlight Capital Re (NASDAQ: GLRE) conference call, David Einhorn of Greenlight Capital said he added to his Apple (NASDAQ: AAPL) bet recently. According to SEC filings, Greenlight Capital held 1,307,006 Apple shares at the end of 2012. Mr. Einhorn didn't disclose how large the position is now.

Despite the underperformance, Einhorn is still very bullish on Apple.

"Our thesis remains that Apple has a terrific operating platform and its loyal sticky and growing customer base will make repeated purchases of a growing portfolio of Apple products."

The hedge fund manager said Apple took a major step forward by issuing debt to return over $100 billion to investors.

"This is a vastly more shareholder-friendly capital allocation policy than where Apple stood a few months ago," Einhorn said.

"We've added to our Apple position, now we just wait for the release of Apple's next blockbuster product," he continued.

Einhorn also discussed the hedge fund's Yen put position, saying the position has reversed nearly all of the losses from 2010 and 2 011 which was the portfolio's biggest losing position in each of those years. The gains had more than offset the gold price in the first quarter and April.

Speaking on gold (NYSE: GLD), Einhorn said they were somewhat surprised by the decline.

"We were somewhat surprised by the swift decline in the price of gold in April with Governor Kuroda's appointment, the Bank of Japan officially joined the global monetary printing race," he said. "It seems that every time a central banker takes a more aggressive action without short-term negative consequences, it reinforces the behavior of other central bankers. We believe that recent events including the regime change at the Bank of Japan's support our long-term thesis of both the weaker yen and stronger gold."

The hedge fund manager said they ended the quarter at 38% net long which is where their net exposures stood at the beginning of the year. He said during the quarter, they exited a few long positions and found a couple of new longs and shorts.

Commenting on the market rise, Einhorn notes that corporate earnings for the March quarter have been anemic although investors continue to pour into equities given the lack of other investment alternatives.

"The markets move higher over the past year has been led by multiple expansion as investors have convinced themselves that central banks are in control and their actions support equity prices," he said.


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