David Einhorn (Trades, Portfolio)’s Greenlight Capital initiated a total of nine positions in the early months of the year.
Einhorn’s top buy in the first quarter was in New York-based media company IAC/InteractiveCorp. (IAC, Financial). It operates a family of websites, including Match.com, Tinder and HomeAdvisor.
IAC sits in 0.98% of the portfolio. Greenlight bought over 249,000 shares for an average price of under $148 a share. The holdings reported as an estimated loss of 3% to date.
Greenlight also initiated a top position in the stock of New York luxury designer Tapestry Inc. (TPR, Financial), which holds 0.14% of the portfolio space. Einhorn bought 105,000 shares for an average price of $49.36 a share. The holding reported an estimated loss of 10% to date.
The hedge fund billionaire's third-largest position was in the stock of Abercrombie & Fitch Co. (ANF, Financial). The average purchase price was $21.13 a share. A total of 212,000 shares sit in 0.13% of the portfolio. The buy has produced an estimated gain of 24% so far. About 29.97% of the stock’s float is shorted.
Other buys included Bloomin Brands Inc. (BLMN, Financial), PayPal Holdings Inc. (PYPL, Financial), Urban Outfitters Inc. (URBN, Financial), Sprouts Farmers Market Inc. (SFM, Financial), Office Depot (ODP, Financial) and Roku Inc. (ROKU, Financial).
Top sales
Greenlight also exited a handful of positions in the early months of the year, posting estimated gains in his largest sales.
Chemical manufacturing company Chemours Co. (CC) was the largest deletion from the portfolio. The guru sold for an average price of under $50 a share after holding the investment since the fourth quarter of 2015. The purchase price then was under $7 a share. Quarterly return estimates show he reported a 332% gain on the stock.
JC Penney Co. Inc. (JCP, Financial) was the second-largest divestment. He bought more than 6.3 million shares of the retailer in the final months of the year for an average price of $3.22 a share. He dumped the shares in the first quarter. He sold for an average price of $3.61 a share. The sale produced an estimated gain of 12%.
Total portfolio
Greenlight's total portfolio of 52 stocks was valued at $3.9 billion in the first quarter, according to regulatory filings. In the final months of the year, the same portfolio had 57 stocks and was worth $5.5 billion, regulatory filings showed.
The portfolio is roughly invested in the following sectors: 26% consumer cyclical, 22% financial services, 13% health care, 11% technology, 10% industrials, 6% real estate, 6% energy and 3% basic materials.
In 2017, Greenlight Re reported a rate of return of 1.5% compared to the S&P 500’s 21.71%. In 2016, it reported 7.2% compared to the S&P’s 11.99%. Reports show six consecutive years of underperformance compared to the S&P 500.
IAC/InterActiveCorp
The media conglomerate's biggest revenue generator is the online-dating platform Match Group, which represents 39% of total revenues. HomeAdvisor, which connects homeowners with service professionals for home improvement projects, makes up 16% of its total revenues.
On Thursday, the company was trading at over $152 a share, up 0.11%.
The stock has gained 100% in the last three years of trading. Year to date, it is up 17%. Its 52-week range is $98.27 to $166.64 a share.
The stock is trading with a price-earnings ratio of 42 times, which is lower than 68% of its peers in the same sector. It is trading at 25 times forward earnings. And it has a price-book ratio of 5 and a price-sales ratio of 3.69. Both ratios are lower than 60% of its peers.
Analysts forecast revenues of $5 billion in 2020, up from $4 billion in 2018. On the income statement, the company reported revenues of $3.3 billion in December 2017, compared to $3.1 billion the prior year. It also reported net income of $305 million in December 2017, compared to a loss of $41 million in the prior year.
IAC has an average annual growth in earnings of -11.5% over the last five years. Its operating margin has been inconsistent. It was 5.7% in December 2017, compared to 7.73% the prior year. The margin reached 89% in 2007, but fell -3.48% the following year.
IAC reported long-term debt of $1.97 billion in December 2017, compared to $1.58 billion in the prior year. Its free cash flow was reported at $341 million in December 2017, compared to $266 million in the prior year.
IAC has a market cap of $12.5 billion. GuruFocus rates the company with financial strength of 6 out of 10 and a profitability and growth of 7 of 10.
It has drawn gurus like Leucadia National (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Steven Cohen (Trades, Portfolio), George Soros (Trades, Portfolio) , Pioneer Investments (Trades, Portfolio), Jim Simons (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio). Ruane Cunniff sold out in the first quarter.
Tapestry
Tapestry, which owns designer brands like Stuart Weitzman and Kate Spade, was trading at under $45 a share on Thursday. It saw a 0.02% increase. Over the last three years, the stock has jumped 19%. Over the last 12 months, the stock has lost 1%. The 52-week range is $38.70 to $55.50 per share.
The stock has dividend yield of 3%, which is higher than more than 60% of the more than 1,000 companies in its peer group.
Tapestry has experienced flat revenue. Analysts are predicting revenues of $6.3 billion in 2020, compared to $5.8 billion in 2018. The company reported $4.48 billion in June 2017, compared to $4.49 billion in the prior year. Net income was reported $591 million, compared to $461 million in the prior year.
The company has seen a decline in its operating income over the years. It reported average annualized earnings growth of -12.6% over five years.
Tapestry reported long-term debt of $1.58 billion in June 2017, compared to $861 million the prior year. It reported $571 million in free cash flow, compared to $353 million in the prior year.
It has a $12 billion market cap. GuruFocus ranks the company a 6 out of 10 in financial strength and a 5 out of 10 in profitability and growth.
Gurus who held the stock in the first quarter include: John Hussman (Trades, Portfolio), Pioneer Investments, Lee Ainslie, Louis Moore Bacon and Simons. Guru Joel Greenblatt (Trades, Portfolio) sold out in the first quarter.
Abercrombie & Fitch Co.
On Thursday afternoon, the specialty retailer was trading for just over $26 a share, up 2.4%. In three years, the stock has jumped 25%. In the last 12 months, it has increased 85%. The 52-week range is $8.81 to $29.20 a share.
The dividend yield is 3.16%, in the top 79% of more than 1,000 peers in the sector.
Analysts are predicting revenues to climb to $3.5 billion in 2020, compared to $3.4 billion in 2019. The company reported revenue of $3.49 billion in January, compared to $3.3 billion the prior year. In net income, it reported $7 million in January, compared to $4 million in the prior year.
Abercrombie & Fitch reported an average annual earnings growth of -7.8% over the last five years. It reported 24.8% over the last 12 months.
Its operating margin at the beginning of the year was reported at 2.47%, compared to 0.69% a year ago.
In long-term debt, it reported $250 million in January, compared to $263 million last year. It reported free cash flow of $179 million, compared to $44 million in the prior year.
Abercrombie & Fitch has a market cap of $1.77 billion. GuruFocus ranks it 7 out of 10 in financial strength and 4 of 10 in profitability and growth.
Other gurus who invested in the stock in recent months are Greenblatt, Simons, Paul Tudor Jones (Trades, Portfolio) and Barrow, Hanley, Mewhinney & Strauss.
