STX Seagate Technology Holdings PLC

David Einhorn's Greenlight Capital posted a 6.8% return in the first quarter buoyed in part by Apple Inc. (AAPL)--a stock the hedge fund manager described as "one of the most misunderstood" in the market.

Greenlight's gains were higher than the industry average of 4.94%, but less than the Standard & Poor's 500 index's 12.58% rise for the quarter, including dividends.

In a letter to investors dated Tuesday, Greenlight said Apple's revenue grew by 66% and earnings per share increased by 78% last year, but its share price only rose 25%.

"Yet not everyone agrees that [Apple's] stock price is merely playing catch-up to its fundamentals," the letter said.

"Not only do we think the skeptics are misguided, we believe the shares remain cheap," it added.

Apple shares jumped almost 50% to $600 a share from $405 in the first quarter, according to the Greenlight letter. They rose 1.2% in Wednesday's trading session to finish at $579.17.

The comments followed Einhorn's remarks at the Ira Sohn Conference earlier this month that investors "assume that Apple is a hardware company" and its fate hinges on the success of a particular product. But he said Apple is a software company that can get customers hooked once they use its products. Greenlight owned 1.46 million shares in Apple as of March 31.

As for criticism that Apple's shares are held by too many hedge funds, deeming the ownership base fickle, Greenlight said hedge funds hold less than 5% of Apple's outstanding shares and that Apple accounts for less than 2% of their equity assets against a 4% weighting in the S&P 500.

"Hedge funds are actually underweight Apple," the letter said.

Greenlight said Seagate Technology Inc. (STX) was another major winner for the firm during the first quarter. Seagate fell 2.8% to close at $24.32 Wednesday.

"Though the shares advanced from $16.40 to $26.96 during the quarter, the share price remains at a very low multiple of both near-term and longer term earnings," the letter said, adding that the firm expects the stock's earnings to reach $10 to $15 a share this calendar year, before settling at an average of about $5 a share in future years when industry shortages caused by last year's floods in Thailand subside.

Einhorn, who rose to fame for pointing out accounting troubles surrounding Lehman Brothers Holdings Inc. months before its collapse in September 2008, has two known short positions to which the firm is still clinging: Green Mountain Coffee Roasters Inc. (GMCR) and St. Joe Co. (JOE).

Despite Green Mountain's recently announced plan for the launch of its latest version of a coffee machine to alleviate earnings pressure from upcoming patent expirations, Greenlight said results so far have been "unimpressive." It added that the new products are more expensive and the range narrower.

On St. Joe, a property developer that Greenlight has been shorting for more than a decade, the letter said it believes the company's total impairment, while large, isn't enough.

"We believe [St. Joe] continues to carry its mostly vacant commercial real estate at inflated values," it said.

-By Liz Moyer and Amy Or, Dow Jones Newswires; 212-416-3142; amy.or@dowjones.com

Grafico Azioni Seagate Technology (NASDAQ:STX)
Storico
Da Giu 2024 a Lug 2024

Grafico Azioni Seagate Technology (NASDAQ:STX)
Storico
Da Lug 2023 a Lug 2024