David Einhorn Holds Onto Streettracks Gold (GLD) and Buys EMC Corp, Harman International and Pfizer

“Nonetheless, the environment remains very challenging. On the one hand, security prices reached unusually attractive levels early this year, as many investors sought to preserve capital by raising cash. On the other hand, it is apparent that the country aces extraordinary economic challenges that will, at the minimum, lead to a very uncertain investment landscape. It raises the question of which is bigger: the economic crisis or the government? We don’t know that answer for sure, but we continue to have a fraction of our assets in gold…Just in case. Add in a huge dose of political risk and a deteriorating fiscal position, and this makes it a very “interesting” time to be an investor to say the least.”

“EMC provides storage systems, software and services. We believe that EMC’s core information storage business has attractive recurring and secular growth characteristics. 2009 will be an extremely challenging year for all companies exposed to enterprise IT spending. However we expect EMC to fare better than most given the less volatile nature of storage spending. EMC should benefit from any normalization in enterprise IT spending given its large market share and presence. We established our position at an average price of $10.72 which represents less than 7x our estimate for 2009 EBIT, net of EMC’s cash and its investment in publicly traded VM Ware.”

“HAR makes audio and electronic systems for the automotive, consumer and professional end markets. The company’s key products are high-end audio systems and navigation systems for luxury automobiles. We evaluated HAR a number of times following the failed buyout by KKR – a deal had been agreed at $120 per share in August 2007 – and we finally got involved when the company seemed to suffer from the perfect storm of negative events: accelerating losses from the simultaneous launch of “infotainment” solutions on a multitude of new automotive models and extraordinary deterioration in luxury auto sales. The partnerships established their positions at an average share price of $11.07, currently, HAR is losing money. We expect profitability to return as recently launched platforms mature. HAR executes on a $400 million cost saving plan by fiscal year 2011 (over $4 per share after tax), and luxury automotive sales eventually improve. HAR could earn over $2 per share within the next couple of years and much more in a normal environment”

“PFE is one of the largest pharmaceutical companies in the world. We established a position in PFE at an average price of $13.59, or 6x current year consensus earnings, net of cash, after the stock sold off following the company’s announcement of a deal to acquire Wyeth (WYE) for over $60 billion in January 2009. We believe PFE is attractive both as a stand-alone entity and in a combination with WYE. PFE’s revenue are scheduled to decline materially over the coming years as a result of patent expirations aon a number of key drugs including Lipitor, which accounted a quarter of PFE’s revenue last year. PFE’s acquisition of WYE will enable PFE to “fill” this coming revenue hole while simultaneously adding product diversity and improving its position in important areas such as vaccines and biologics. We believe the new PFE/WYE entity will be able to generate over $2 in stable earning per share, which, if achieved should lead to a multiple re-rating in the future. Should the WYE purchase fail for some reason, we believe we purchased PFE at a discount to the run-off value of its existing products with no value ascribed to its pipeline and multi-billion R&D investments.”

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