Einhorn scrapped Pfizer in Q3, added CBS and others

Tue Nov 8, 2011 2:37pm EST
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By Svea Herbst-Bayliss

BOSTON (Reuters) - Hedge fund manager David Einhorn exited Pfizer (PFE.N: Quote), his largest holding, and made new bets on CBS Corp (CBS.N: Quote)., General Motors Co (GM.N: Quote) and Marvell Technology Group (MRVL.O: Quote) during the third quarter.

Einhorn made significant changes during the quarter, but that was not enough to prevent the firm, Greenlight Capital LLC, from losing a little bit of money. He is one of the industry's most successful investors, with a history of delivering double-digit returns.

"Generally, our longs fell a bit more than the markets, but our shorts fell even more and our macro investments helped mitigate the loss from being net long in a declining market," Einhorn wrote to clients on Monday, telling them that Greenlight Capital LP fund had dipped 1.2 percent. Reuters reviewed a copy on Tuesday.

French chemical company Arkema (AKE.PA: Quote) was the portfolio's biggest loser during the quarter, Einhorn said. Sprint Nextel Corp (S.N: Quote) also contributed to losses after reporting poor quarterly results, he added.

Most prominently, Einhorn sold about 23 million shares in drugmaker Pfizer. "We exited Pfizer because much of our thesis played out," Einhorn wrote in the investor letter. He also worried about future reimbursement cuts for branded pharmaceuticals.

A year ago, Einhorn had said Pfizer shares were "substantially" undervalued because of investor pessimism about the company's roster of experimental medicines, but added that the new chief executive officer could brighten the prospects.

During the quarter, Einhorn also exited BP (BP.L: Quote), saying his firm roughly broke even on that investment, and he liquidated a bet against hospice care provider Amedisys Inc (AMED.O: Quote), which had been very profitable.

At the same time he made three new bets, he said in the letter.   Continued...