David Einhorn’s new buys include even more tech stocks. Einhorn already owns boatloads of Apple (AAPL, Financial) and Microsoft (MSFT, Financial). Now he’s adding:
· Dell (DELL, Financial)
· Yahoo (YHOO, Financial)
· Research In Motion (RIMM, Financial)
The least loved of these is – of course – RIMM. Einhorn already has a paper loss in that stock. His average cost was $18.88 a share. Today’s price is $15.05. That’s a 20% loss. And Einhorn only started buying Research In Motion in the last three months of 2011.
But Research In Motion is a pretty small position – 0.81% of Einhorn’s total portfolio – compared to one of his other new buys: Dell.
Einhorn already owns $255 million of Dell shares. He paid $15.36 a share. The stock is now at $18.08 a share. That’s an 18% gain. And Dell will mean a lot more to Einhorn’s performance than Research In Motion. Dell is a 3.9% position for Einhorn. That’s almost five times the size of his investment in Research In Motion. So – for now at least – Einhorn’s paper gain on Dell will more than make up for his paper loss on RIMM.
Finally, there’s Yahoo.
This is a quasi-new buy for Einhorn. He actually bought a 8.5 million shares of Yahoo in the first quarter of 2011 only to sell them for a 2% loss the next quarter. Einhorn was out of Yahoo completely for the third quarter of 2011. And now he’s back in with about 3 million shares bought in the fourth quarter of 2011. Einhorn’s average price is a wee bit lower this time. His original purchase price – back in first quarter 2011 – was $16.64 a share. He got his Yahoo shares about 6% cheaper this time around. Einhorn paid $15.66 a share for his 3 million shares of Yahoo. The stock is down a smidge from there. Around $15.25 a share.
There have been reports of a breakdown in Yahoo’s buyout talks. But that’s par for the course in a situation like this where a company is shopping itself around. There will be lots of people leaking stories for lots of different reasons. Don’t believe everything you read about Yahoo. And certainly don’t try to trade on everything you read about Yahoo.
Why is Einhorn buying Yahoo?
Probably on a sum of the parts basis. As everybody knows, Yahoo has some very valuable Asian assets. Unfortunately, they also have a history of mismanaging their U.S. business and losing the trust of their shareholders.
Einhorn owns just 0.24% of Yahoo. Much less than the more than 5.6% owned by Daniel Loeb. Not surprisingly, Loeb is not a fan of Yahoo’s board. Loeb had this to say to Yahoo:
“…Recent press reports (indicate) that the Board’s current strategic direction is to emphasize the technology aspects of (Yahoo’s) business at the expense of advertising and media, which accounts for the vast majority of (Yahoo’s) revenues. (We) believe that this approach places (Yahoo’s) core revenue generating capability at substantial risk, fails to recognize the tremendous growth opportunity in video, and directly results from a dearth of essential expertise in media and entertainment at the Board level.
…The reluctance of the Board to prioritize shareholder value to date – evidenced by years of deferring and delaying comprehensive strategic initiatives and missing out on myriad accretive transactions and strategic opportunities – will no longer be tolerated or endorsed by investors. Shareholders deserve earnest representation and oversight as (Yahoo) confronts the critical investment and capital allocation decisions it expects to face in the next few months.”
Is Einhorn content to ride Daniel Loeb’s coattails at Yahoo? Who knows? But we do know that David Einhorn is back in Yahoo stock as of last quarter.
Talk to Geoff About David Einhorn’s New Buys [email protected]
· Dell (DELL, Financial)
· Yahoo (YHOO, Financial)
· Research In Motion (RIMM, Financial)
The least loved of these is – of course – RIMM. Einhorn already has a paper loss in that stock. His average cost was $18.88 a share. Today’s price is $15.05. That’s a 20% loss. And Einhorn only started buying Research In Motion in the last three months of 2011.
But Research In Motion is a pretty small position – 0.81% of Einhorn’s total portfolio – compared to one of his other new buys: Dell.
Einhorn already owns $255 million of Dell shares. He paid $15.36 a share. The stock is now at $18.08 a share. That’s an 18% gain. And Dell will mean a lot more to Einhorn’s performance than Research In Motion. Dell is a 3.9% position for Einhorn. That’s almost five times the size of his investment in Research In Motion. So – for now at least – Einhorn’s paper gain on Dell will more than make up for his paper loss on RIMM.
Finally, there’s Yahoo.
This is a quasi-new buy for Einhorn. He actually bought a 8.5 million shares of Yahoo in the first quarter of 2011 only to sell them for a 2% loss the next quarter. Einhorn was out of Yahoo completely for the third quarter of 2011. And now he’s back in with about 3 million shares bought in the fourth quarter of 2011. Einhorn’s average price is a wee bit lower this time. His original purchase price – back in first quarter 2011 – was $16.64 a share. He got his Yahoo shares about 6% cheaper this time around. Einhorn paid $15.66 a share for his 3 million shares of Yahoo. The stock is down a smidge from there. Around $15.25 a share.
There have been reports of a breakdown in Yahoo’s buyout talks. But that’s par for the course in a situation like this where a company is shopping itself around. There will be lots of people leaking stories for lots of different reasons. Don’t believe everything you read about Yahoo. And certainly don’t try to trade on everything you read about Yahoo.
Why is Einhorn buying Yahoo?
Probably on a sum of the parts basis. As everybody knows, Yahoo has some very valuable Asian assets. Unfortunately, they also have a history of mismanaging their U.S. business and losing the trust of their shareholders.
Einhorn owns just 0.24% of Yahoo. Much less than the more than 5.6% owned by Daniel Loeb. Not surprisingly, Loeb is not a fan of Yahoo’s board. Loeb had this to say to Yahoo:
“…Recent press reports (indicate) that the Board’s current strategic direction is to emphasize the technology aspects of (Yahoo’s) business at the expense of advertising and media, which accounts for the vast majority of (Yahoo’s) revenues. (We) believe that this approach places (Yahoo’s) core revenue generating capability at substantial risk, fails to recognize the tremendous growth opportunity in video, and directly results from a dearth of essential expertise in media and entertainment at the Board level.
…The reluctance of the Board to prioritize shareholder value to date – evidenced by years of deferring and delaying comprehensive strategic initiatives and missing out on myriad accretive transactions and strategic opportunities – will no longer be tolerated or endorsed by investors. Shareholders deserve earnest representation and oversight as (Yahoo) confronts the critical investment and capital allocation decisions it expects to face in the next few months.”
Is Einhorn content to ride Daniel Loeb’s coattails at Yahoo? Who knows? But we do know that David Einhorn is back in Yahoo stock as of last quarter.
Talk to Geoff About David Einhorn’s New Buys [email protected]
