Greenlight Capital Q4 Letter: New Stakes in Brighthouse Financial, Twitter, Time Warner, Ensco

David Einhorn's Greenlight Capital has released its fourth quarter 2017 letter.  They finished the year up 1.6%.

Greenlight Takes New Stakes in Brighthouse Financial, Twitter, Ensco, Time Warner

The hedge fund firm initiated numerous new positions recently.

The hedge fund's new stake in Brighthouse Financial (BHF) is all about valuation.  The company was spun out of MetLife and they feel analysts have been too negative on BHF's prospects.  They feel shares are trading at a 40-50% discount to peers and note management is incentivized if shares appreciate.

Einhorn's firm also jumped back into Time Warner shares (TWX), a previous holding.  They utilized volatility in the name to re-establish a stake as the US government has opposed their sale to AT&T (T).  Greenlight feels the government has a weak anti-trust case but even if they somehow win, shares are still cheap and the company has strategic options.

Greenlight also entered Twitter (TWTR) shares with their thesis being that the user experience has improved yielding growth in new users and time spent on the platform.  They feel the company now has a better pitch to advertisers, yielding revenue growth.  The company has around a 25% margin gap to other social media peers and Greenlight feels they can close the gap.  (Note: David Einhorn is on Twitter, though he doesn't post about the market, usually just poker.)

Embedded below is Greenlight Capital's Q4 2017 letter:



For more from this manager, be sure to also check out David Einhorn's recent investment talk at  Oxford Union.

Top 10 Stocks That Matter Most To Hedge Funds Per Goldman Sachs (Q4 2016)

Goldman Sachs' quarterly hedge fund trend monitor outlines what stocks matter most to hedge funds.  Here's the list as the fourth quarter 2016:


Top 10 Stocks That Matter Most To Hedge Funds: Q4 2016

- Alphabet (GOOGL / GOOG)

- Facebook (FB)

- Amazon.com (AMZN)

- Bank of America (BAC)

- Charter Communications (CHTR)

- Apple (AAPL)

- Microsoft (MSFT)

- Yahoo (YHOO)

- Time Warner (TWX)

- NXP Semiconductor (NXPI)


As you can see, it's quite tech-heavy.   The major exception is Bank of America (BAC), which was a consensus buy in Q4 among hedge funds we track in our newsletter.

For more on what stocks hedge funds have been buying & selling, check out the brand new issue of our premium newsletter that reveals the portfolios of 25 top funds.

What We're Reading ~ 11/30/16

Warren Buffett's meeting with University of Maryland students [UMD]

Is the next financial crisis on its way? [Steve Eisman]

A write-up on the impending Hilton (HLT) spinoff [Clark Street Value]

CBRE (CBG): industry deep dive to detect an emerging moat [Punch Card]

A look at Discovery Communications (DISCA/K) [Contrarian Edge]

Sustainable sources of competitive advantage [Collaborative Fund]

Why deep learning matters and what's next for AI [Algorithmia]

The unexpected genius of Facebook's Mark Zuckerberg [Fortune]

Google's online travel adventure upsets its biggest advertisers [Bloomberg]

A billionaire's dreams of creating a guns empire [NYMag]

If oil refiners crash, so will the economy [WSJ]

Mastercard, Visa set to reap spoils of India's war on cash [Bloomberg]

How Best Buy (BBY) fought Amazon [WSJ]

The evolution of media & entertainment: conversation with CEOs [YouTube]

How to get comfortable with being umcomfortable [Inc]

Why gut feelings may really help you make risky decisions [Washington Post]

Why stoicism is one of the best mind-hacks ever devised [Aeon]

What We're Reading ~ 10/26/16

The $108 billion man who has beaten the market [WSJ]

Cash: the most hated asset class on the planet [Felder Report]

What you can learn from family business [HBR]


On the future of video [REDEF]

The intelligent industrial revolution [nVidia]

Five market insights from Peter Lynch [Ivanhoff]

Explaining what made the internet 'break' recently [Gizmodo]

U-Haul parent Amerco (UHAL): ready to move [Barrons]

Arbs stay on sidelines of AT&T, Timer Warner deal [WSJ]

Private equity is sitting a ton of cash [ai-cio]

Interview with CEO of new exchange IEX [Bloomberg]

Why negative churn is such a powerful growth mechanism [Tom Tunguz]

WeChat works to maintain startup culture as it matures [WSJ]

What We're Reading ~ 8/3/16

Ego is the enemy [Ryan Holiday]

Is active management dead? Not even close [CFA Institute]

When is a 'value' company not a value? [Investing Research]

Interview with Time Warner CEO Jeff Bewkes [Bloomberg]

On Tiger Global's bet on Flipkart [LiveMint]

Amazon's ascent in India shows that price isn't everything [Nikkei]

On capital light compounders [Base Hit Investing]

Why is the stock market so high? Ask the bond market [NYTimes]

US homeownership rate falls to five-decade low [WSJ]

How China became the world's e-commerce king [TheDrum]

Didi schools Uber on doing business in cutthroat China [Bloomberg]

Uber finds passage to India blocked by Ola [Bloomberg]

What happened to Yahoo? [Waiters Pad]

Google plots cheaper wireless future to expand fiber project [Bloomberg]

Here comes 5G wireless, but first a reality check [Recode]

Big US brokerages chase the rich [Reuters]

App coins and the dawn of the decentralized business model [Medium]

How free mobile games are designed to make money [Vox]

What We're Reading ~ 6/15/16

Calculating the return on incremental capital investments [Base Hit Investing]

The history of the online travel industry [Skift]

A conversation with Alphabet's Eric Schmidt [Charlie Rose]

Armstrong Flooring: a spinoff with big upside [StockSpinoffInvesting]

Time Warner's Jeff Bewkes fights the industry's urge to merge [Variety]

Why housing is about to eat the US economy [CSen]

Student loans as economic depressant [Across the Curve]

The college debt crisis is worse than you think [Boston Globe]

Thoughts from a recent trip to China [Going Long]

The future of banking is in China [WSJ] 

China's credit card clearing market now open for competition [SCMP]

China is close to having its own Silicon Valley [Business Insider]

Are we in a mattress store bubble? [Freakonomics]

The U.S. is richer than ever [Calafia Beach Pundit]

Welcome to Larry Page's secret flying car factories [Bloomberg]

What's the best management advice you've ever received [Alan Murray]

What's one thing you've learned at Harvard Business School [Medium]

Profile of Nike's CEO Mark Parker [SurfaceMag]

Struggling Ralph Lauren tries to fashion a comeback [WSJ]

Broyhill's Research Notes on Time Warner (TWX)

Broyhill Asset Management about a month ago penned research notes on shares of Time Warner (TWX).  With all the talk of the content bundle coming apart, Broyhill sees downside risk around $65-70 per share, while TWX trades around $72 currently.

They take a look at the company's Turner division, Warner Brothers, HBO, and subscriber losses to outline the various risks in the investment.

They conclude that, "Putting it all together, we see $40B of value at Turner even assuming that accelerating subscriber losses result in significant earnings shortfalls and continued multiple compression. We see $20B of value at WB backed by attractive intellectual property and broader distribution driving pricing for content. At almost any reasonable multiple for HBO, we have a very difficult time justifying today’s $80B enterprise value of Time Warner even under very challenging assumptions."

Embedded below are Broyhill's research notes on Time Warner:

Goldentree's Steve Tananbaum on Wall Street Week

Anthony Scaramucci's rebooted version of Wall Street Week recently interviewed Steve Tananbaum of Goldentree Asset Management.

Goldentree manages $24 billion and has a bottom up value process focused on the credit markets.

Tananbaum commented on the recent market volatility, noting that investors all have differing views on what we should be concerned about: the Federal Reserve tightening, China issues, potential instability in Europe, etc.  He says that's what the market is struggling to prioritize.

He also notes that the bond market isn't as concerned with the direction of earnings.

As far as sectors go, Tananbaum said he thinks the media sell-off has been overdone, and singled out Time Warner (TWX) and Tribune Media (TRCO).

Embedded below is the video of Tananbaum's appearance on Wall Street Week:



If you missed it, be sure to also check out Eminence Capital's Ricky Sandler on Wall Street Week as well as Mario Gabelli's interview.

What We're Reading ~ Analytical Links 10/15/14

Berkshire Beyond Buffett: The Enduring Value of Values [Lawrence Cunningham]

On spectrum value and a case for Verizon [Bronte Capital]

Importance of ROIC: A glance at the last 42 years of Wells Fargo [Base Hit Investing]

Building the perfect investor [Millennial Invest]

A look at the potential future for the cable industry [GlennChan]

Pay TV's new worry: 'shaving' the cord [WSJ]

Six figure incomes - and facing financial ruin [WSJ]

T-Mobile's stock slump offers buying opportunity [Yahoo]

On how Buffett's portfolio managers are faring [Fortune]

Why millennials are shunning cars [Washington Post]

The freelance economy and word of mouth [HBR]

What We're Reading ~ Analytical Links 2/5/13

M&A world: stacks of corporate cash looking for deals [All About Alpha]

Taking money off the table to diversify emotionally [Abnormal Returns]

Looking at annual trends in shareholder activism [Activist Insight]

Observations of individual stock returns 1983-2006 [Longboard]

Time Warner breaks out HBO results [Barrons]

Will Valeant overdose on acquisitions? [Herb Greenberg]

FCC chief tells Sprint chair he is skeptical of T-Mobile deal [Reuters]

Cable TV mogul looks to add Formula 1 to sports bag [NYPost]

Taking a look at Kinder Morgan [Glenn Chan]

Did Google really lose on its original Motorola deal? [Dealbook]

Nestle looking at selling even more assets? [Reuters]

Top destinations for foreign investment dollars [Business Insider]

What We're Reading ~ Analytical Links 6/19/13

Timeless investing wisdom from great hedge fund managers [The Art of Value Investing]

Oakmark's Bill Nygren on Google (GOOG) [Reformed Broker]

Are higher mortgage rates bad for the economy? [ValuePlays]

Overcoming your negativity bias [Dealbook]

James Montier: doing nothing not a bad idea in this market [InvestmentNews]

Pairs trading: performance of a relative-value arbitrage rule [Turnkey Analyst]

A framework to analyze utility stocks [Graham Disciple]

3 things Bill Gates has learned from Warren Buffett [Bill Gates]

Time Warner (TWX) looks fully priced now [Barrons]

On a potential Kabel Deutschland/Liberty Global connection [FT]

On behavioral portfolio management [CFA]

Why Netflix (NFLX) is producing original content [Felix Salmon]

As interest rates rise, banks face new stress tests [Fortune]

US regulator says Deutsche Bank (DB) horribly undercapitalized [Reuters]

Barnes & Noble (BKS) keeps slashing Nook tablet prices [CNNMoney]

Google (GOOG) takes home half of worldwide mobile internet ad revenues [eMarketer]

The Physics of Wall Street: A brief history of predicting the unpredictable [Seeking Alpha]

Coatue's Philippe Laffont on Apple, Google & Technology/Media Trends

Coatue Management's founder Philippe Laffont appeared on Bloomberg TV today to talk about tech stocks, including Apple (AAPL), Google (GOOG), and others.  He says that tech stocks are 'historically cheap' and he's always on the lookout for the new trends.


On Apple (AAPL)

"It’s cheap by any measure. The key is not to think whether stock will be up $50 in the next few months. The key is what would it take for Apple to get to $800. It would be a great return if just from today it went back to $600. To me, the company has to take back the offense. The company has been a little bit put on defense. Samsung and Google have been very strong competitors... at some point Apple is going to take back the offense."

Laffont was asked why he is still bullish on the name and while Coatue still owns shares, our Hedge Fund Wisdom newsletter flagged that the hedge fund sold 55% of its AAPL stake at the end of 2012 so that's worth keeping in mind.  They've been a long-term bull on the name. 

Laffont wants to see the company make product moves and make better use of cash, saying:

"The company is so big that how they use the cash is going to determine value, there’s no way about it. But there are going to be some new products coming in. I think they have some things up their sleeve."

Coatue reportedly hosted AAPL's CFO at their investor day earlier this year.  Laffont hinted that AAPL should make some acquisitions as well as he wants the company to bring on some new talent and ideas.


On Google (GOOG) 

Laffont thinks the tech giant could be a triple in 5-7 years from now, trading at just 5x earnings.


On Storage & "The Cloud" 

He sees storage as a long-term trend as data continues to move to the cloud.  One of his largest investments in public markets is datacenter provider Equinix (EQIX).  Coatue has recently started making private investments and Box.net was one of their first (another play on this trend).


Talking Other Tech Companies 

He also commented on how there's a new 'four horsemen' of tech: Google, Apple, and Amazon.com (AMZN), original members of the group remain, but he would add Samsung and Twitter to that bunch.  He says Twitter has huge strategic value, but little revenue so it's hard to value.  On Facebook (FB), Laffont feels that in an increasingly mobile world, advertising is a lot harder.


On Tech Value Traps & Shorts

The Coatue manager went on to note that while many investors in other sectors look for bargains and 'cheap stocks,' tech isn't necessarily the best place to do that because a lot of times in this sector these cheap stocks are actually value traps.  He listed Hewlett Packard (HPQ), Microsoft (MSFT), and Intel (INTC), citing a rising mobile computing world.

He also mentioned his firm was exploring a concept on the short side he called a 'paperless office' where people are all using iPads and people don't need/use paper as much.  He says that, "A lot of the companies stuck in the desktop/printer world are going to have a tough time going forward."


On Media & Content

Laffont's content theme focuses on smartphones and how everyone will have one eventually and want to consume content on those devices (citing Netflix (NFLX), HBO Go, ESPN).  He thinks the world will move towards content being monetized in very different ways.  He said he likes Time Warner (TWX), CBS (CBS), and News Corp (NWSA).


Embedded below is the Bloomberg TV video of Philippe Laffont's appearance:



To see the rest of Coatue's portfolio, head to the new issue of our Hedge Fund Wisdom newsletter that was recently released.