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By Svea Herbst-Bayliss
Jan 23 (Reuters) - Hedge fund manager David Einhorn, whosemoves are closely watched in the markets, told investors thisweek he is sticking with some of the names he has long likedeven though they hurt his fund's performance last year.
Einhorn loaded up on Marvell Technology Group,which had been last year's biggest loser, and he jumped in tobuy Apple after the technology company's stock pricehad cratered. Einhorn also said he is sticking with his negativeoutlook on Japan, where his bearish bet finally began to pay offlate last year.
Einhorn also told investors that he shorted nutritionalsupplements company Herbalife Ltd last year but has noposition in the company now, a person familiar with hispresentation to clients said.
The battle around Herbalife has captivated Wall Street eversince William Ackman publicly announced his $1 billion shortposition, sending the shares tumbling in late December. Ackmanis now effectively facing off against fund manager Daniel Loeb,who put on his long Herbalife position after the Ackmanpresentation when the shares were inexpensive. Loeb has told hisclients that he sees the stock price running higher. Peoplefamiliar with Kynikos Associates said that its manager JimChanos was probably short Herbalife last year as well.
While much looks the same in Einhorn's $8 billion GreenlightCapital portfolio, the manager also initiated new positions. Heis betting against the future of some iron ore companies,arguing that supply is now outstripping demand. Einhorn did notname the companies he is shorting, sticking with tradition wheremost short sellers stay mum about exactly what they are doing.
Looking back on 2012 when his fund earned roughly 8 percent,Einhorn said performance was not a catastrophe but fell short ofhis goals. Einhorn blamed results on the fourth quarter when thefund lost nearly 5 percent, cutting "our year from good topedestrian."
With his typical wry humor, Einhorn told clients in hisfive-page investment letter "Our coffee was too hot, our applewas bruised, and our iron ore supplements didn't go downsmoothly."
He was referring to coffee roaster Green Mountain CoffeeRoasters, which Einhorn had expected to fall. But whenthe stock price rose late in the year, it wiped out all theprofits he had accumulated through those trades.
Similarly, Apple gave back all of its third quarter gains,Einhorn said, when the stock price tumbled to $532.17 from$667.10. But he said he used the low stock price to repurchasethe shares he sold in the third quarter.
In Marvell, Einhorn said disappointing earnings early in2012, followed by a $1 billion award in a patent infringementsuit, hurt the company. But this year, the outlook is better.
"We expect the shares to sprint higher in 2013," Einhornwrote about the semiconductor company, noting that the patentinfringement award will be significantly reduced or eliminatedaltogether.
"Though we would love to admit we are wrong, sell the stockand move on, we continue to like the opportunity here," hewrote, adding that Marvell is on the cusp of a "large producttransition," which has not been fully valued.
Einhorn also added to his position in Vodafone afterthe stock fell on news that he says "just didn't seem that bad."Vodafone owns 45 percent of Verizon Wireless and the head ofU.S. telecommunications giant Verizon Communications has saidthat it may buy Vodafone, a move Einhorn appears to endorse."Maybe there is an investment banker with time on his handsreading this letter," Einhorn wrote.
Turning to General Motors, a stock Einhorn said heliked at an industry conference in October, the manager praisedthe car maker for its share repurchases but said it still hasmore capital on hand to reward investors with more buy backseither from the government or in the open market.
Einhorn, like many other investors, has been pessimisticabout Japan's prospects, and said those bearish views havefinally begun to pay off. He said the yen has started to weakenin the wake of a change in leadership in Japan and suspects thecurrency will fall more. "We suspect there is more to come,possibly a lot more to come. We remain bearish." The falling yenhelped offset what Einhorn said where the fund's lumps on gold.
Einhorn has long been a favorite with big investors thankslargely to his outstanding long-term record where he has earnedan average annual rate of return of 19.4 percent since his wifegave him the go-ahead to launch the fund in 1996.
In reviewing the year, Einhorn said long positions,including his bet on Apple which soured only at the end of theyear, fueled performance. He said he lost money on the shortside of the portfolio.
