Einhorn's big winners were short positions in First Solar (FSLR) and Green Mountain (GMCR). Unfortunately, Einhorn bet against the Japanese yen which rocketed higher in 2011.
Einhorn commented that the Chinese may be set up for a hard landing that few expect.
"The global environment is very complicated. On the one hand the Federal Reserve has taken a much-needed break from quantitative easing (at least for the moment). Accordingly, inflation in oil and food has abated, providing relief to the US economy. Bearish forecasts that the US was headed back into recession proved wrong for the third time since the end of the last recession. On the other hand, Asia appears to be in much worse shape than it was at this time last year and could be a drag on the world economy going forward. Very few people trust any of the economic data coming out of China, making it difficult to gauge the situation there. Some of the smartest people we know have very dim views. The Chinese have been a leading growth engine for the last two decades and are largely credit with leading the world out of the recession in 2009. A change in their economic circumstances could really upend things."
Einhorn also commented on new long positions in Dell (DELL) and Xerox (XRX). Einhorn noted that net of cash and investments DELL has a PE multiple of 4X. Einhorn was optimistic that Xerox would be able to allocate over $1 billion to share repurchases in 2012.
Einhorn ended the letter by noting that his five largest positions were:
- Apple (AAPL)
- General Motors (GM)
- Gold (GLD)
- Market Vectors Gold Miners (GMI)
- Microsoft (MSFT)