David Einhorn (Trades, Portfolio), president of Greenlight Capital, seeks long-term capital appreciation through investments that have the potential to achieve consistent returns and safeguard capital. During the second quarter, the activist investor entered a position in Hewlett Packard Enterprise Co. (HPE, Financial) and eliminated four positions from his portfolio: Time Warner Inc. (TWX, Financial), Liberty Global PLC (LBTYK, Financial), Syngenta AG (SYT, Financial) and Cigna Corp. (CI, Financial).
Hewlett Packard Enterprise
Einhorn added 4.45 million shares of HP Enterprise at an average price of $17.96 per share. The guru increased his portfolio 1.19% with this transaction.
HP Enterprise, a global provider of information technology infrastructure equipment, said fiscal second-quarter revenues declined 13% from the three-month period ending April 30, 2016. Despite headwinds, the company still accelerated major components of its growth strategy according to CEO Meg Whitman. HP Enterprise Chief Financial Officer Tim Stonesifer expects improvement through the rest of the year as the company “mitigates commodities cost pressure and eliminates costs associated with spin mergers and acquisitions.”
HP Enterprise’s profitability ranks a modest 5 even though the company’s profit margins are near a 10-year high and outperform over 70% of global competitors.
Time Warner
Einhorn sold his 2,060,409 shares in Time Warner at an average price of $99.02 per share. The guru pared 2.8% of his portfolio with this transaction.
Although the company has strong profit margins and returns, Time Warner said operating incomes declined 8% year over year primarily due to higher programming costs in the Turner segment and higher film and advertising expenses in the Warner Bros. segment.
Liberty Global PLC
Einhorn sold his 3,294,780 shares of Liberty Global at an average price of $31.17 per share. With this transaction, the guru trimmed 1.60% of his portfolio.
Liberty Global’s financial strength ranks 4 out of 10, suggesting a poor financial outlook. The company’s interest coverage of 1.14 and Altman Z-score of 0.52 both imply potential bankruptcy in the upcoming years.
Syngenta AG
Einhorn sold his 1.015 million shares of Syngenta at an average price of $92 per share. The guru trimmed 1.25% of his portfolio with this transaction.
Syngenta has six medium warning signs, including high price valuations and declining revenue growth. The Swiss agricultural inputs company’s operating margin is near a 10-year low of 11.52% despite outperforming 76% of global competitors. Additionally, the profit margins have declined 3.6% per year on average during the past five years.
Cigna
Einhorn sold his 435,000 shares in Cigna at an average price of $160.52 per share. With this transaction, the guru trimmed 0.89% of his portfolio.
Although the company has good financial strength and profitability, Cigna’s price is near a 10-year high of $178.37. Cigna has five medium warning signs including a dividend yield near a 10-year low of 0.02%.
Sells outweigh buys
Einhorn also added a position in Altaba Inc. (AABA, Financial), a holding company containing Yahoo Japan Corp. (YAHOY, Financial) and Alibaba Group Holding Ltd. (BABA, Financial). While the guru’s buys in Altaba and HP Enterprise increased the portfolio 4.95% in the aggregate, the four sells mentioned above resulted in a combined-portfolio decrease of 6.54%.
Disclosure: I do not have positions in the stocks mentioned.
