David Einhorn

David Einhorn

Last Update: 11-16-2015

Number of Stocks: 42
Number of New Stocks: 4

Total Value: $6,032 Mil
Q/Q Turnover: 18%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

David Einhorn Watch

  • David Einhorn Comments on SunEdison

    For the first part of the year SunEdison (NYSE:SUNE) was by far the fund’s biggest winner. The shares rallied from $19.51 to a peak of $32.13 on June 23 before collapsing to $7.18 by Sept. 30. SunEdison’s business is to develop solar and wind projects for major utilities and commercial customers that agree to buy the power over a very long term, often 20 years. These projects have purchase contracts from highly creditworthy counterparties and produce an average unlevered return on capital of 10% and 13% in developed and emerging markets, respectively. SunEdison makes money by selling the projects at a premium to investors seeking safe, long-term income.

    Given the low-rate environment, SunEdison thought it could make even more money if it created its own related yield vehicles to buy the projects and dividend the income to shareholders. It createdTerraForm Power (NASDAQ:TERP) for its developed markets projects and TerraForm Global(NASDAQ:GLBL) for its emerging markets projects. Initially this worked very well, and in July 2014SunEdison successfully brought TerraForm Power public. This July it brought TerraForm Global public with much less success.


  • David Einhorn Comments on CONSOL Energy

    CONSOL Energy (NYSE:CNX) is an Appalachia-based coal and natural gas production company. From its most recent high of $33.34 on May 8, the shares traded down gradually to $9.80, where they ended the quarter. There was no single moment where the shares fell sharply; it was essentially an orderly collapse. Yes, coal and natural gas prices both fell modestly during the decline. Yes, the company’s effort to bring its coal assets public in a separate vehicle was greeted coolly by the market. Yes, there is an oversupply of natural gas in the region, which has caused local realizations and quarterly earnings to fall below plan. We could have mitigated a portion of our loss by hedging natural gas, but with the price already near a historical low, we made the incorrect decision not to hedge the commodity risk.

    However, CONSOL Energy has had plenty of overlooked good news. The company went through a significant cost-cutting effort and cut its capital-spending budget aggressively. In July it reported fantastic drilling results and a significant success at a test well in the Utica Shale. Ordinarily, the market responds favorably to positive drilling news. In the current environment, it has responded more like a child receiving socks as a birthday present, “Gee, just what I always wanted … more, cheap natural gas.” We believe the market has undue concern about the near-term prospects for Appalachian coal and natural gas, leading it to discount the company’s long-term resource value far beyond anything we anticipated.


  • Dodge & Cox Comments on Petrobras

    Petrobras (NYSE:PZE) is the leading producer of oil and gas in Brazil, accounting for roughly 90% of Brazil’s oil production. In 2014, its stock price declined approximately 50% due to a corruption scandal involving kickbacks on procurement contracts, a weakening Brazilian Real, and increasing debt from years of outspending its cash flow. The lower oil price environment and high financial leverage have raised concerns about the viability of funding growth through additional borrowings. The CEO and other senior executives resigned earlier this year and were replaced with a new management team. Investors are skeptical about the company’s ability to rectify its problems and grow production. As a result, it trades at 2.6 times 2015 estimated operating cash flow and at a substantial discount to its net asset value, well below historical levels and that of its peers.

    Despite this perfect storm of challenges, the company managed to grow production in the first half of 2015 compared to the first half of 2014. This growth was driven by the company’s leading position in the deepwater fields, also known as “pre-salt,” of the Santos Basin, which is one of the Western Hemisphere’s largest oil discoveries in 30 years. These fields are prolific, low-cost, and should enable Petrobras to maintain or grow production over the long term. In addition to possessing excellent reserves, Petrobras has improved corporate governance: the company hired two independent investigative firms and meaningfully revamped internal governance structures. The new management team is displaying more discipline on capital spending; it has announced plans to reduce capital expenditures by 37% and focus on the company’s most profitable exploration and production projects. Combined with a large scale divestiture program, these efforts should lead to a stronger balance sheet.


  • Dodge & Cox Comments on Schlumberger

    Schlumberger (NYSE:SLB)—the world’s leading diversified oilfield services company—provides a variety of technology-based services that enable companies to identify hydrocarbon reservoirs, drill complex wells, manage production, and maximize recovery over the life of the well. The company is most dominant in international markets, where it is often larger than its next two biggest competitors combined. This leading scale contributes to its superior profitability and free cash flow generation. As a result, Schlumberger has historically traded at a premium valuation compared to its peers. That said, valuations for the Oil Services industry are low relative to historical averages; and, when compared to other leading global industrial companies, Schlumberger’s valuation at 2.3 times sales looks reasonable.

    Although the near-term outlook for oil prices is uncertain, we believe Schlumberger’s long-term growth prospects are attractive. Through its research and development (R&D) program and targeted acquisition strategy, Schlumberger is able to offer advanced and integrated services that are differentiated and improve a customer’s productivity per well. Furthermore, Schlumberger is in the midst of a restructuring program to increase efficiency and reduce capital intensity. Management has proactively adjusted its cost structure to deal with reduced activity levels in the current environment. These efforts have enabled the company to continue generating attractive levels of free cash flow, which provide strategic options for reinvesting in the business or for returning capital to shareholders. Continued industry consolidation should improve the competitive and pricing environment. Halliburton’s proposed acquisition of Baker Hughes would combine the second- and third-largest industry competitors. While weaker demand and a low oil price environment have weighed on Schlumberger’s share price, we believe its valuation, solid balance sheet, cash flow generation, and prospects make it an attractive long-term investment opportunity. We recently added to the position (a 3.1% holding on June 30).


  • Macy's Aims to Improve Growth, Signs Agreement With Luxottica Group

    Though Macy’s Inc. (M) reported a very disappointing third quarter, it recently it reached an agreement with Luxottica Group S.p.A. (LUX) to bring LensCrafters stores to as many as 500 Macy’s in the U.S. over the next three years, which will hopefully boost growth for the future.

    Macy's is an omni-channel retail organization operating stores and websites under the Macy's and Bloomingdale's brands. The company sells apparel and accessories, cosmetics, home furnishings and other consumer goods in 45 states. 


  • David Einhorn's Presentation on Consol Energy

  • Chris Davis' Stocks Trading Below the Peter Lynch Value

    Chris Davis (Trades, Portfolio) is the portfolio manager of Davis Financial Fund, an independent, employee-owned investment management firm founded in 1969. Davis Advisors manages more than $60 billion across several different asset classes.

    Here are the stocks in his portfolio that are trading below the Peter Lynch value.


  • David Einhorn Discloses Positions in Garmin, TerraForm, Vivint, CNX Coal

    David Einhorn (Trades, Portfolio), a value investor and founder of hedge fund Greenlight Capital, disclosed ownership of four new positions added in the third quarter: CNX Coal Resources LP (NYSE:CNXC), Garmin Ltd. (NASDAQ:GRMN), TerraForm Global Inc. (NASDAQ:GLBL) and Vivint Solar Inc. (NYSE:VSLR).

    Einhorn’s firm declined 17.4%, versus 5.3% for the S&P 500 Index, in the first three quarters of the year, led by poor performance of its holdings SunEdison (NYSE:SUNE) and Consol Energy (NYSE:CNX). Einhorn runs a concentrated portfolio, dedicating the most capital to its highest-conviction holdings. He discussed his process in his third-quarter letter:


  • Why Icahn and Others Still Own Apple

    Numerous top tier investors continue to hold Apple Inc. (NASDAQ:AAPL) shares including Carl Icahn (Trades, Portfolio), David Einhorn (Trades, Portfolio), Bill Nygren (Trades, Portfolio), and David Tepper (Trades, Portfolio). With the shares trading at what I believe is a low valuation, I thought I would review some of the risks and reasons to own Apple.



  • Stocks With the Lowest P/E in the Coal Industry

    These are the companies in the coal industry that are trading with the lowest P/E ratio, according to the All-In-One screener by GuruFocus.

    Natural Resources Partners LP (NRP) is trading with a P/E ratio of 2.23; according to the DCF calculator the stock has a fair value of $11.51 while it is trading at about $1.76. That means it is trading with a margin of safety of 85%. The price has dropped by 86% during the last 12 months and is now 87.27% below its 52-week high and 9.32% above its 52-week low.


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