In its second-quarter letter to investors David Einhorn‘s Greenlight Capital highlighted the performance of its portfolio during the April-June period, emphasizing that a significant contribution to the growth was made by two long positions in Apple Inc. (NASDAQ:AAPL), and Micron Technology, Inc. (NASDAQ:MU). Overall, the return of Greenlight Capital amounted to 7.9%, net of fees and expenses, during the second quarter, while the long portfolio containing stakes in Apple and Micron has gained 14%. The Year-to-Date return of Greenlight amounted to 6.4%.
Apple Inc. (NASDAQ:AAPL) currently represents the largest stake in Greenlight’s equity portfolio. The fund owning 1.99 million shares as of the end of the first quarter, while the stake for the second quarter is still yet to be revealed in the fund’s new 13F filing. Apple’s stock returned close to 22% during the second quarter of 2014. Among the facts that have driven the growth of Apple’s stock, Mr. Einhorn’s fund mentioned that Apple has added around 130 million new customers during the last year, despite the fears of investors. In addition, Apple Inc. (NASDAQ:AAPL)’s EPS grew by 15% on the year, and the guidance show a stable growth in the near future as well. Overall, Apple remains to be “inexpensive at about 11x earnings net of cash,” the fund said in the letter.
Mr. Einhorn is a fan of Apple Inc. (NASDAQ:AAPL) for quite some time. In a previous letter to investors, for the third quarter of 2013, Greenlight mentioned that Apple’s iPhone 5S was a hit and the fund considers that the company will keep finding new ways of using its TouchID and iBeacon to provide new services and apps. In addition, the fund emphasized the fact that Apple Inc. (NASDAQ:AAPL)’s non-hardware, e-commerce segment (iTunes, iBooks, App Store, etc.) is growing faster than Amazon.com, Inc. (NASDAQ:AMZN) and that Apple is making more money in its e-commerce segment alone than Amazon.com, Inc. (NASDAQ:AMZN) earns from its entire business. “We believe that near-term share performance will track the success of the new phones, while the longer-term share price will reflect the market’s eventual understanding of AAPL’s strong ability to earn high-margin and recurring revenue streams,” Greenlight said in October.
Another tech company from the Greenlight’s portfolio with significant gains is Micron Technology, Inc. (NASDAQ:MU). With over 44 million shares at the end of March, Micron Technology, Inc. (NASDAQ:MU) was the second largest stake in the fund’s equity portfolio. The company’s stock has been performing very well, advancing by almost 50% year-to-date. Greenlight pointed out that the jump in the DRAM prices was not a short-term thing, therefore, Micron Technology, Inc. (NASDAQ:MU)’s earnings keep growing and beating the forecasts. “We believe consensus earnings estimates remain too low, positioning the company for further earnings surprises and multiple expansion,” Greenlight said.
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