Greenlight Capital is out with its Q2 2013 shareholder letter. ValueWalk has just obtained a copy of the letter posted today. David Einhorn discloses several new short positions in the letter, including a very profitable short in J.C. Penney Company, Inc. (NYSE:JCP), a large holding of his ‘ex-boyfriend’, Bill Ackman. Below are some brief excerpts on the shorts followed by the full hedge fund letter in scribd.
We closed a large number of positions during the quarter. The most notable are:
Aruba Networks, Inc. (NASDAQ:ARUN) (short): We covered at a nice gain in May as competitive pressure from Cisco Systems, Inc. (NASDAQ:CSCO) caused the company to miss earnings and reduce forward guidance. Boston Properties, Inc. (NYSE:BXP) and Essex Property Trust Inc (NYSE:ESS) (shorts): These are the last of the ill-fated idea to short a bunch of REITs into the real estate collapse, based on the view that the market would re-rate real estate to be a riskier asset than it had been prior to the collapse. One by one we have given up on these ideas, and now they are all gone. The first cover was the best cover.
Dicks Sporting Goods Inc (NYSE:DKS) (short): We believed that Dick’s best days of growth were behind it and that it would eventually succumb to competition from the internet, where the same products are sold cheaper. With the introduction of a sales tax for internet commerce, this seems like less of a threat. The company missed earnings earlier this year, and we were able to exit with a loss that roughly matched the market.
Greenhill & Co., Inc. (NYSE:GHL) (short): We initiated a short position in this boutique investment bank in late 2010 based on an expensive valuation, a rash of insider selling, a business unit in runoff, and a deferred compensation scheme that helped it meet near-term earnings expectations. We covered for a nice gain when expectations were lowered to reflect stagnant M&A advisory revenue and deteriorating margins.
J.C. Penney Company, Inc. (NYSE:JCP) (short): This was our most profitable short of 2012. Though the retailer was poorly positioned, the shares rocketed in early 2012 based on overhyped promises put forth by a highly promotional CEO. Following the presentation of its strategy, the new CEO dumped a bunch of his personal stock on the market. We doubted the new strategy would succeed. We covered when the Board fired the CEO before he could turn the company into a penny stock.