David Einhorn (Trades, Portfolio) Greenlight Capital during the second quarter of 2014, the company increased its exposure by 7% to 3.5 million shares. Greenlight Capital stake is worth over $172 million, which accounts for 2.4% of the funds total equity portfolio. David Einhorn (Trades, Portfolio) hedge fund is the largest hedge fund shareholder in Conn's Inc (CONN, Financial) and acquired his holding at an average price of $35.49 per share.
In Einhorns First Quater Letter to Investors say why he was bullish on Conn's Inc (CONN, Financial).
CONN is a specialty retailer of appliances, furniture, mattresses and electronics with 79 locations in Texas and the Southwest. CONN finances 77% of customer purchases through its proprietary subprime credit portfolio. In February, the company announced 33% comparable store sales growth in Q4 with strong gross margins. However, it also announced increased credit losses and reduced earnings guidance from a range of $3.80 -$4.00 to a range of $3.40-$3.70 for calendar 2014. Given the market’s past experience with deterioration in subprime credit, the stock reaction was severe: The price fell from $79 at the start of the year to $32 on the news. We believe that this is a retailer with 15-20% unit growth and current double digit comparable store sales growth, and that the market overreacted to moderately bad news. We acquired shares at an average price of $35.49 and they ended the quarter at $38.85.
Eihorn believes that the company has the potential to growth its units from 15% to 20%.
Oil State International (OIS, Financial)
Einhorn Greenlight Capital maintained its 2.5 million stake in Oil State International despite the 34% in the company's stock price over the second quarter of 2014. The 34% drop in the company stock price deduced Greenlight Capital holdings from $271 million to $176 million . Greenlight Capital is the largest hedge fund shareholder in Oil State International (OIS, Financial). The company stock pice deducing by 34% in the second quarter was a result of the company spinning off its Accommodations business segment. Oil International Shareholder Relation Department Explained that the share price drop was caused by the spin-off of Civero Corporation (CVEO, Financial).
OIS' stock price change is a direct result of the spin-off of our Accommodations business segment, Civeo Corporation, into a separately traded public company (CVEO, Financial) effective as of May 30, 2014. (CVEO) began regular way trading on the NYSE on June 2, 2014, as did (OIS, Financial). (OIS) distributed the shares of (CVEO) to its shareholders on May 30, 2014 via a tax free spin. For each one share of (OIS), a shareholder received two shares of (CVEO) (2 for 1). In terms of the relative value of the two publicly traded companies (OIS and CVEO), (OIS) closed today (August 20, 2014) at $62.70 and (CVEO) closed at $24.80. Thus, if you combined the stocks to get a consolidated stock price, today’s pro forma closing price would have been $112.30 per share ($62.70 + ($24.80 * 2)). As a frame of reference, on May 30, 2014, which was the last day (OIS) traded on a combined basis, (OIS) closed at $107.58 per share ($97.14 on April 30, 2014, 30 days prior to the distribution date).
Civeo Corporation (CVEO, Financial)
Einhorn Greenlight Capital holds a 6.5 million stake in Civeo Corportaion thanks to the spin-off by Oil State International Inc. Greenlight Capital Stake is currently worth $154 million and represents to 2.5% of its equity portfolio.
Reasona Holdings
During the first quarter of 2014, Greenlight Capital exstablished a postion in Reasona Holdings. The bank is the largest regional bank in Japan and was formed in through the 2002 to 2003 merger and recapitalization of local banks Japan. Einhorn explains how the company is cheap and worth more then what it is selling for.
We established a position in Resona, the largest Japanese regional bank, at a price of ¥547, representing 0.8x book value and 8x earnings. Resona was formed through the 2002-2003 merger and recapitalization of three local banks in the Tokyo and Osaka regions. As part of that recapitalization, the Japanese government bought a majority equity stake. Under new management, the bank cleaned up its balance sheet, began paying back the government stake, and has been profitable every year since, reaching a 13% ROE last year. In 2013, management announced a five-year plan to buy out the remaining government shareholding. Due to stronger than expected earnings, that plan is well ahead of schedule, and the company is buying back stock from the government at very attractive valuations. The accretion from the buyback does not appear to be reflected in analyst models. With the more volatile international Japanese banks trading at 9x EPS, and its peer regionals at 13x EPS, Resona is cheap on both an absolute and relative basis. Resona shares ended the quarter at ¥499.
All of Greenlight Capital's Current Holdings
David Einhorn (Trades, Portfolio) May 6, 2014 Interview with Bloomberg
