Here’s How Einhorn is Playing the Trump Presidency

For the three people who are still interested in what a professional hedge fund manager is buying and selling, I grabbed excepts of Einhorn’s letter which outlined his plans.

Bear in mind, David has a wretched 2015 and made just 8% or so last year. Nevertheless, he’s representative of the establishment fund in the professionally managed space and is always transparent enough to earn my interest.

“While it’s hard to know exactly where President-elect Donald Trump stands from day to day, his main economic policy objective appears to be employment. To that end, he has proposed corporate tax cuts, infrastructure investment and military buildup, combined with anti-immigration policies and trade protectionism,” he added.

To take advantage of Trump’s agenda the hedge fund manager is “long a variety of low multiple, tax-paying, U.S. value stocks.” He noted any corporate tax reduction would benefit companies that pay large amounts of taxes. Einhorn said Amerco, Chemours, Dillard’s and DSW will benefit as examples of “full federal taxpayers with healthy profits.”

The hedge fund manager also discussed these other Trump trades:
Long Apple: “AAPL stands to benefit from repatriation of foreign cash and tax reform.”

Long General Motors: “More jobs, higher income for savers, and higher wages should drive demand for consumer durables, and there is no better consumer durable than an automobile.” The letter noted Greenlight Capital increased its position in GM.

Long gold: “Our sense is that Mr. Trump doesn’t hold any core policy beliefs and is apt to change his mind as he sees fit. This will lead to more political and economy uncertainty,” which is positive for gold, according to Einhorn.

Short “bubble basket”: “Bubble basket stocks mostly don’t have profits, which makes them unlikely to benefit from corporate tax cuts.” Einhorn is short a basket of high-valuation stocks he calls the “bubble basket.” He cited Netflix as a member.

Short oil fracker companies: “Despite repeated claims in their slick presentations, the economics still don’t work when all investment and corporate costs are taken into account.”

Short Caterpillar: “Even in a U.S. infrastructure boom, CAT is overpriced.”