Greenlight Capital's Q4 Letter: Dramatically Increased General Motors Position

David Einhorn's hedge fund Greenlight Capital finished 2016 up 8.4% and has returned 16.1% annualized since inception in 1996.

Their fourth quarter letter examines how their portfolio is positioned now that Donald Trump is president and will be trying to change policies. 

Greenlight is long various US value stocks that could benefit from corporate tax cuts (AMERCO, CC, Dillard's, DSW), they're long companies that can benefit from repatriation of foreign cash (Apple (AAPL)), and they're long companies that can benefit from demand for consumer durables (General Motors (GM), a position in which they've "dramatically increased their position."

They're also short 'bubble basket' stocks (Netflix), oil frackers, and Caterpillar (CAT).

Turning back to their thesis on GM, Greenlight writes that, "While the bears have been screaming 'peak auto' for the last couple of years, we think a strengthening job market will sustain the current upcycle and lead to better than expected credit performance at GM's finance subsidiary.  While the bears also cite long-term concerns over self-driving cars, we see a huge intermediate-term opportunity in assisted-driving cars."

During the quarter, David Einhorn's firm also exited its positions in AECOM (ACM), Michael Kors (KORS), and Take-Two Interactive Software (TTWO).   They also covered short positions in FLSmidth (Denmark: FLS), Mead Johnson Nutrition (MJN), and Reynolds American (RAI).

At the end of 2016, their largest positions in alphabetical order were: AerCap, Apple, CONSOL Energy, General Motors, and gold.  Their average exposures were 106% long and 81% short.

Embedded below is Greenlight Capital's Q4 letter:



We've posted up a bunch of letters today, so be sure to also check out Third Point's Q4 letter as well as Howard Marks' latest memo.

Lone Pine Capital Adds to B/E Aerospace, Dollar General & DSW

Steve Mandel's hedge fund firm Lone Pine Capital has filed 3 separate 13G's with the SEC.  Here's the breakdown:


B/E Aerospace (BEAV)

First, Lone Pine has disclosed a 5% ownership stake in B/E Aerospace (BEAV) with 5,285,850 shares.  The 13G filed with the SEC was required due to portfolio activity on August 16th and represents a 22% increase in their position size since the end of Q2.

BEAV was analyzed in our premium Hedge Fund Wisdom newsletter last November and is up over 58% since then. Lone Pine originally started their BEAV position back in the first quarter of 2012.

Per Google Finance, B/E Aerospace is "a manufacturer of cabin interior products for commercial aircraft and business jets and distributor of aerospace fasteners and consumables. The Company sells its products directly to the airlines and aerospace manufacturers. It also designs, engineers and manufactures customized fully integrated thermal and power management solutions for participants in the defense industry, aerospace original equipment manufacturers (OEMs) and the airlines. In addition, it provides aircraft cabin interior reconfiguration, program management and certification services. The Company operates in three segments: commercial aircraft, consumables management and business jet."


Dollar General (DG)

Second, Mandel's hedge fund also revealed a 5.4% ownership stake in Dollar General (DG) with 17,684,604 shares.  The 13G was filed with the SEC due to trading activity on August 14th.  Their position size has increased almost 30% since the end of Q2.

Per Google Finance, Dollar General is "a discount retailer in the United States primarily in the southern, southwestern, midwestern and eastern United States. The Company offers a selection of merchandise, including consumables, seasonal, home products and apparel. The Company's merchandise includes national brands from manufacturers, as well as private brand selections with prices at substantial discounts to national brands. It offers its merchandise at everyday low prices through its convenient small-box (approximately 7,200 square feet) locations"


DSW (DSW)

Lastly, Lone Pine has disclosed a 5.6% ownership stake in DSW (DSW) with 2,045,064 shares.  This means they've over doubled their exposure to this name since the end of the second quarter.

The 13G Lone Pine filed with the SEC signifies portfolio activity on August 16th.

Per Google Finance, DSW is "a United States branded footwear and accessories specialty retailer.  DSW has two segments: the DSW segment, which includes the DSW stores and dsw.com sales channels, and the leased business division segment"

For more on this hedge fund, we've also highlighted some of Lone Pine's other activity here.

Hedge Fund Valinor Management Adds to DSW Inc (DSW)

David Gallo's hedge fund firm Valinor Management just filed an amended 13G with the SEC regarding its position in DSW Inc (DSW). Due to portfolio activity on January 12th, 2011, Valinor has disclosed a 9.8% ownership stake in DSW with 1,634,361 shares.

Valinor has boosted its position size by 64%, buying 637,834 more shares over the past three and a half months. At third quarter's end (September 30th, 2010), they owned 996,527 shares. In other recent portfolio activity from Gallo, we've highlighted Valinor's new position in Cott (COT) as well.

Gallo's firm is named after lands inhabited by immortal souls from the books of J.R.R. Tolkien. Before founding Valinor, Gallo was at Roberto Mignone's Bridger Management and earned his MBA at Harvard Business School.

Per Google Finance, DSW Inc is "a branded footwear specialty retailer. As of January 30, 2010, the Company operated 305 shoe stores in 39 states in the United States. The Company offers an assortment of dress, casual and athletic footwear for women and men, as well as accessories through DSW stores and dsw.com."

For the latest in hedge fund portfolio activity, scroll through our coverage of SEC filings.

David Gallo's Valinor Management Updates Position

In an amended 13G filed with the SEC, we see that David Gallo's hedge fund Valinor Management has updated their stake in DSW Inc (DSW). The filing was made due to activity on December 31st, 2009 and Valinor now owns a 6.5% ownership stake in DSW with 1,068,230 aggregate shares owned. This represents a 33.5% reduction in their position (540,470 shares) as they previously owned an aggregate of 1,608,700 shares per their last 13F filing which detailed holdings as of September 30th, 2009.

This is the first time we've covered Valinor so we wanted to provide a brief background. David Gallo founded Valinor after previously working at Roberto Mignone's Bridger Management, whom we've also covered on the site. Gallo received his MBA from Harvard Business School. And, a fun fact: hedge fund Valinor is named after the lands often inhabited by immortal souls from the books of J.R.R. Tolkien. Valinor Management is part of the Tiger Cub network of hedge funds (see the Tiger Cub family tree here) due to the previous relationship with Bridger. We'll continue to cover their portfolio movements from now on.

Taken from Google Finance, DSW is "a branded footwear specialty retailer. As of January 31, 2009, the Company operated 298 DSW stores in 37 states in the United States. The Company separates its merchandise into four categories: women’s footwear, men’s footwear, athletic footwear and accessories. It also offers a complementary assortment of handbags, hosiery and other accessories. The Company’s stores average approximately 23,000 square feet and carry approximately 27,000 pairs of shoes."