David Einhorn (Trades, Portfolio), founder of the $10 billion hedge fund Greenlight Capital, saw his gains for the year through November reach 11%, slightly below the S&P 500’s gain of 11.9% for the same period.
The investor had an eventful year, giving a take-down presentation of a big short position in AthenaHealth in October, taking the reigns as half owner and chairman of new homebuilder Green Brick Partners, and joining the activist chorus with a stake in EMC Corp (EMC, Financial) disclosed in November.
Several of the noted stock picker’s holdings also had an extraordinary year, rising more than 60%. According to the All-in-One Screener, GuruFocus’ powerhouse stock search engine, Einhorn’s most-gaining stocks of 2014 were: Green Brick Partners (GRBK, Financial), Micron Technology Inc. (MU, Financial) and Take-Two Interactive Software Inc. (TTWO, Financial).
Green Brick Partners (GRBK, Financial)
Einhorn’s most profitable stock year to date was Green Brick Partners Inc., which had jumped 605.6% from $1.75 on Jan. 2 to $8.48 at close on Friday.
Einhorn disclosed owning 15,650,727 shares, or one half of the company, on Oct. 27. He also became chairman of the board of the new company, which was previously called BioFuel Energy Corp.
“We are very pleased to help transition BioFuel Energy, the former ethanol producer, into Green Brick Partners, a successful homebuilder,” said David Einhorn (Trades, Portfolio), Chairman of the Board of Directors. “This deal is a win-win for everyone involved and creates an exciting platform for Green Brick’s future growth.”
Micron Technology Inc. (MU, Financial)
Shares of Einhorn’s holding, Micron Technology, advanced 60.5% year to date, and he has been selling shares over the past three quarters. He began buying the stake in the third quarter of 2013 at an average price of $15 per share; the price closed Friday at $30 per share.
Micron Technology manufactures semiconductor memory chips. Einhorn explained his thesis for the investment in his fourth quarter 2013 letter:
“We established a position in MU at an average price of $16.49, marking the first time we have taken a long position in a company in which we once had a material short position. The industry has changed and so has MU. Its purchase of Elpida Memory out of bankruptcy in August 2013 marks the end of a decade of consolidation from roughly a dozen major DRAM players down to just three. Technological advances and locked-up intellectual property have made it unlikely that any new players will enter the industry in the intermediate term. MU and its competitors have signaled that they will refrain from adding capacity and will instead prioritize economic value-add. For the first time in memory, MU intends to use its excess cash flow to shrink the outstanding share count rather than build new factories. We believe the company will approach $4 per share of earnings and free cash flow in calendar 2014, and should enjoy a better multiple as investors begin to appreciate the new dynamic. The shares ended the quarter at $21.75.”
Micron Technology Inc. has a market cap of $37.57 billion, with a P/E ratio of 13.70 and P/S ratio of 2.60. Micron Technology Inc. had an annual average earnings growth of 7.60% over the past 10 years.
Take-Two Interactive Software Inc. (TTWO, Financial)
Take-Two Interactive Software shares rose 67% year to date, closing at $28.99 per share on Friday, near a 52-week high. Einhorn initiated his position when shares averaged $17 per share in the fourth quarter of 2013. He held 4,704,600 shares at the end of the third quarter of 2014, after selling 95,400 shares that quarter.
Take-Two Interactive makes video games such as the popular “Grand Theft Auto” and sells in physical and digital forms.
For the quarter ended Sept. 30, Take-Two announced GAAP revenue that beat expectations at $126.3 million, compared to $148.8 million in the same quarter a year ago, which excluded net revenue and cost of goods sold related to Grand Theft Auto V that launched in third quarter 2014. GAAP net loss from continuing operations was $41.4 million, or $0.51 per diluted share, compared to a net loss of $124.1 million, or $1.40 per diluted share, in the same quarter a year ago.
The company raised its fiscal 2015 guidance citing better-than expected results, strong current business trends and positive outlook.
Take-two Interactive Software Inc. has a market cap of $2.44 billion; its shares were traded at around $28.99 with a P/E ratio of 8.60 and P/S ratio of 1.30. Take-two Interactive Software Inc. had an annual average earnings growth of 15.10% over the past five years.
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