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David Einhorn Top Buys: Automatic Data Processing Inc., Cardinal Health Inc., Microsoft Corp., The Travelers Companies Inc., VALIDUS HOLDINGS LTD

David Einhorn Likes Insurers

December 02, 2009 | About:
(GuruFocus, December 2, 2009) Following my early article on the top holdings (long holdings, should we say), these are the stocks that he purchased the most during the quarter that ended on September 30, 2009:

No. 1: Automatic Data Processing Inc. (NASDAQ:ADP), Buy: 2.29% of the portfolio - Total: 1,512,500 Shares

Automatic Data Processing, Inc. is one of the largest providers of computerized transaction processing, data communication, and information services in the world.. Automatic Data Processing Inc. has a market cap of $21.82 billion; its shares were traded at around $43.45 with a P/E ratio of 18.1 and P/S ratio of 2.5. The dividend yield of Automatic Data Processing Inc. stocks is 3%. Automatic Data Processing Inc. had an annual average earning growth of 4.1% over the past 10 years. GuruFocus rated Automatic Data Processing Inc. the business predictability rank of 2-star.

No. 2: Cardinal Health Inc. (NYSE:CAH), Add: 2.76% of the portfolio - Total: 6,652,500 Shares

Cardinal Health, Inc. is one of the leading providers of products and services to healthcare providers and manufacturers. Cardinal Health Inc. has a market cap of $11.62 billion; its shares were traded at around $32.23 with a P/E ratio of 9.8 and P/S ratio of 0.1. The dividend yield of Cardinal Health Inc. stocks is 2.2%. Cardinal Health Inc. had an annual average earning growth of 10.7% over the past 10 years. GuruFocus rated Cardinal Health Inc. the business predictability rank of 3-star.

No. 3: Microsoft Corp. (NASDAQ:MSFT), Add: 2.39% of the portfolio - Total: 3,400,000 Shares

Microsoft develops, manufactures, licenses, and supports a wide range of software products for a multitude of computing devices. Microsoft Corp. has a market cap of $262.58 billion; its shares were traded at around $29.41 with a P/E ratio of 18.2 and P/S ratio of 4.5. The dividend yield of Microsoft Corp. stocks is 1.8%. Microsoft Corp. had an annual average earning growth of 10% over the past 10 years. GuruFocus rated Microsoft Corp. the business predictability rank of 4-star.

No. 4: The Travelers Companies Inc. (NYSE:TRV), Buy: 4.04% of the portfolio - Total: 2,132,272 Shares

St. Paul Travelers is a leading provider of commercial property-liability insurance and asset management services. Under the Travelers brand, the company is also a leading underwriter of homeowners and auto insurance through independent agents. The Travelers Companies Inc. has a market cap of $29.73 billion; its shares were traded at around $52.39 with a P/E ratio of 9.1 and P/S ratio of 1.2. The dividend yield of The Travelers Companies Inc. stocks is 2.3%. The Travelers Companies Inc. had an annual average earning growth of 55% over the past 5 years.

No. 5: VALIDUS HOLDINGS LTD (NYSE:VR), Buy: 1.78% of the portfolio - Total: 1,789,766 Shares

Validus Holdings, Ltd is a global provider of short-tail lines of reinsurance including property catastrophe, property pro-rata and property per risk, marine and energy, and other specialty lines. Validus Holdings Ltd has a market cap of $2.03 billion; its shares were traded at around $26.5 with a P/E ratio of 5.7 and P/S ratio of 1.6. The dividend yield of Validus Holdings Ltd stocks is 3%.

Conclusion

Einhorn is also the Chairman of Greenlight Capital RE, Ltd, a Cayman Islands-based reinsurance company and one of its major shareholders. As of 2009, Einhorn beneficially owned 6.25 million shares of Greenlight RE. He probably knows a thing or two about insurance companies. Two of the top five purchases falls into that circle of competence.

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Rating: 4.3/5 (3 votes)

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