This Hedge Fund Star Just Dumped Microsoft to Load Up on Apple

Few hedge fund managers garner the type of attention that David Einhorn does just by opening his mouth. The Greenlight Capital manager's name has even become a verb. No investor wants his stocks to get "Einhorned," which is what happens when Einhorn takes a publicly bearish stance against a company, typically preceded by a short position.

Einhorn also has no qualms about criticizing companies that he's bullish on and has sizable stakes in, famously bashing Microsoft (NASDAQ: MSFT  ) CEO Steve Ballmer in 2011. Just Einhorn's suggestion that Ballmer should step down sparked a rally. A few months ago, Einhorn also launched a legal assault on Apple (NASDAQ: AAPL  ) over its capital allocation policy, even though the Mac maker remains one of his top picks.

Well, Einhorn just dumped a major chunk of his Microsoft position while loading up on Apple in the first quarter. Greenlight has filed its most recent 13F disclosure, which can be compared with the previous one.

Position

Q4 2012 Shares

Q1 2013 Shares

Difference

Microsoft

10.8 million

6.1 million

4.75 million sold

Apple

1.3 million

2.4 million

1.1 million bought

Source: SEC filings. Figures may not sum due to rounding.

Those figures translate into a 44% reduction in Greenlight's Microsoft position, accompanied by an 84% boost in the Apple bet, not including the call options that he was holding at the end of Q4.

We can't know for sure at what prices these trades took place, but Einhorn has partially missed out on Microsoft's major rally this quarter that was sparked in April by ValueAct taking a nearly $2 billion position. Apple, on the other hand, is down marginally quarter to date.

Company

Quarter-to-Date Performance Through Yesterday's Close

Microsoft

19%

Apple

(1.8%)

 Source: Nasdaq.

So far, Einhorn's move has been mistimed, but we're only talking about six weeks of performance. The switch hasn't paid off yet.

There's no doubt that Apple is at the center of technology's largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. Eric Bleeker, The Motley Fool's senior technology analyst and managing bureau chief, is prepared to fill you in on reasons to buy and sell Apple and the opportunities left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.


 

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  • Report this Comment On May 17, 2013, at 10:53 PM, sept2749 wrote:

    Knows something the rest of don't!

  • Report this Comment On May 18, 2013, at 8:47 AM, bluegill88 wrote:

    "Just dumped" is very misleading in your title as this transaction took place last quarter. Heck, he might have already realized his error and reloaded with MSFT stock, and you wouldn't even know it! Otherwise, he sold just prior to MSFT's biggest move in like 10 years. So I wouldn't put too much credence on his move as it has been wrong.

  • Report this Comment On May 20, 2013, at 7:45 AM, NickD wrote:

    Love it when people buy a stock that is just falling great plan

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