DAVID EINHORN is president of Greenlight Capital, Inc., which he co-founded in 1996. Greenlight Capital is a value-oriented investment advisor whose goal is to achieve high absolute rates of return while minimizing the risk of capital loss.
Martin Marietta ($MLM): A strange stock, cyclical business. At a 35 PE, market is wrong to pay up. The company is trying to buy Vulcan, it’s not going well. CEO is a megalomaniac, losing his mind.
France is a mess, huge exposure to Italy and Spain. CDS and bonds are mispricing how risky France is. “A return to the Franc is not out of the question.
Inexplicably, Einhorn just pulled out a magic wand and chanted something Norwegian like a spell.
Norway looks rock solid.
Cairn (based in Scotland)- trading at a discount to its global holdings. Drilling in Greenland, potential could be huge. 20% discount right now.
China: Culture gap and knowledge gap. Greenlight visited China. China views western investors as marks. Chinese infrastructure overbuilt based on overly bullish projections, the roads are empty, the houses are unsold.
There is not enough money coming into the Chinese banks, they are becoming illiquid and money is moving out. “I’m not missing out by not investing in China.”
Japan is now a D-List Country, adult diapers outsold baby diapers this year for the first time ever. The Yen could be in big trouble.
Japanese retail investors own 9% of US REITS, they are desperate for yield. He sees a big problem brewing for US REITs as Japanese money stops coming in, they are expensive.
Facebook gets panned on valuation.
Then an offhanded dig at Green Mountain’s unsold inventory levels.
On Amazon: Operating profits haven’t grown at all, they’ve taken $30 billion in profitless revenues away from other retailers.
Dick’s sporting goods is in big trouble with Amazon’s new push into the category.
On US Steel: Lost money in 9 of the last 13 quarters. Slowing Chinese economy and iron ore supply growth means big trouble for $X
On Apple: Hedge funds own less than 5% of Apple’s shares. THEY ARE UNDERWEIGHT. There is no reason why AAPL can’t become a trillion dollar market cap. There is no prohibition.
Apple is a software company, not a hardware company. They capture customers, making them worth a higher multiple than traditional hardware stocks. Still penetrating the market, gaining share, most cellphones are not yet smartphones. How could this stock have a below market multiple?
He wants $AAPL to launch a preferred class to pay high income. It’s a very new idea the way he’d structure it.
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