Marvel Could Have Bottomed, And 3 More Ideas From This Hedge Fund
There is much to look at with Greenlight Capital. In 2012, the hedge fund lost 7.9% after dropping 4.9% in the fourth quarter of last year. Since inception in May 1996, David Einhorn’s hedge fund returned 1,829%. After fees and expenses, that works out to 19.4% annualized.
There are a number of investing ideas too look at from Einhorn’s fund, both on the long side and on the short side. [See also: 5 Buy and 2 Sell Ideas for Fools]
A Short-Selling Idea
1. Green Mountain Coffee Roasters (GMCR) was a bearish bet that did not work out, so far. The stock rallied from the teens in August 2012 and traded at around $46 recently. The 74% advance was responsible for wiping all of Einhorn’s gains for 2012 on that bearish play. A Starbucks (SBUX) quarterly earnings report mentioned sales of 175 million K-cups in that period. This is nearly double the number sold last year in a two month period. Green Mountain also has a lower valuation than that of Starbucks. Its forward P/E is 15, while Starbucks is valued at a P/E of 21.7.
2. General Motors (GM) performed well for Greenlight, as the fund bought 11% of its shares from the government. Greenlight points to the excess capital in the company, and opportunities of share repurchases as reasons to remain bullish.
3. Marvell Technology (MRVL) stood to be a losing position for Greenlight. Very recently, the company was handed a verdict of more than $1 billion for patent infringement.