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Einhorn's New Investments Keep on Losing

Story corrected to note Marathon Oil split into two companies in July

BOSTON ( TheStreet) -- David Einhorn, trying to make up for losses in his Greenlight Capital hedge fund, is turning to unloved stocks such as Huntington Ingalls (HII - Get Report) and Aeropostale (ARO - Get Report) for a second-half rebound.

It's hard to tell who's having a tougher year, Einhorn or the New York Mets, the baseball team in which he's seeking to buy a $200 million stake. Einhorn's hedge fund fell 5% through the second quarter, prompting him to shake up his investments. The Mets are 20 games back in the standings in the National League East division.

David Einhorn (Greenlight Capital)

Unfortunately, Greenlight Capital's four new positions have likely been unprofitable for Einhorn, who was brutalized by Yahoo (YHOO - Get Report). In a letter to shareholders last month, Einhorn disclosed that Greenlight Capital sold out of its stake in Yahoo at a loss following the Internet search giant's dispute over the ownership transfer of Alibaba's online-payments business Alipay.

Greenlight's 13F filing to regulators on Monday revealed that Einhorn also dumped positions in Cardinal Health (CAH), CIT Group (CIT), Xerox (XRX), MI Developments (MIM), Transatlantic Holdings (TRH) and MDC Holdings (MDC).

On the other hand, Greenlight built new positions in retailer Aeropostale ($60 million), ship builder Huntington Ingalls ($82 million), State Bank Financial (STBZ - Get Report) ($34 million) and Marathon Oil (MRO - Get Report) ($46 million).

The only problem is that many of the new positions has fallen hard since Einhorn reported ownership. Since June 30, assuming Einhorn still owned the stocks, Aeropostale has plunged 31%, Huntington Ingalls has fallen 18%, and State Bank Financial has slipped 12%. Marathon Oil split into two companies as of July 1, splitting into Marathon Petroleum (MPC), and now trades at $27.54.

Hedge funds that manage more than $100 million are required to disclose their equity holdings, options and convertible debt on a Form 13F filed to the Securities and Exchange Commission within 45 days of the end of a quarter. Funds aren't required to report short positions betting on declines. Greenlight ended the second quarter with 35 reported holdings with a market value of $4.6 billion.

Among Einhorn's other moves, the fund manager bulked up several technology positions, increasing the portfolio weighting to the sector more than any other. Greenlight lifted its stake in Microsoft (MSFT - Get Report) by 5.7 million shares to 14.8 million. Einhorn also bought up shares of Seagate Technology (STX) and Apple (AAPL - Get Report).

>>View David Einhorn's Portfolio

Meanwhile, Einhorn cut the hedge fund's exposure to financials by slashing stakes in Employers Holdings (EIG), a provider of worker's-compensation insurance, as well as Fifth Street Finance (FSC). Greenlight also trimmed positions in BP (BP), Pfizer (PFE) and LyondellBasell (LYB), among others.

-- Written by Robert Holmes in Boston.



>To contact the writer of this article, click here: Robert Holmes.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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