BOSTON ( TheStreet) -- David Einhorn's Greenlight Capital initiated stakes in multimedia conglomerate CBS ( CBS), carmaker General Motors ( GM) and semiconductor company Marvell Technology ( MRVL) in the third quarter as the hedge fund bucked the stock market's sharp decline.

Despite the benchmark S&P 500 Index's 14% drop in the quarter, which was marked by violent market swings, "our conservatively managed portfolio essentially went sideways with much lower volatility," decreasing 1.2%, Einhorn said in a letter to hedge fund shareholders this week. Greenlight will report third-quarter holdings next week, which will give a fuller picture of his investments.

Besides equity investments, Einhorn, 42, struggled to work out a deal to buy his beloved New York Mets baseball team, an effort that ultimately failed.

The Greenlight hedge fund fell 6.2% from the start of the year through the end of the third quarter, versus the 7.7% decline of the S&P 500. Returns by famous hedge fund managers are all over the place this year as many countries' economies accelerated, then slowed unexpectedly. Billionaire investor John Paulson is down more than 30% this year, while James Simons' Renaissance Institutional Equities Fund is up more than 30%.

According to eVestment/HFN, its HFN Hedge Fund Aggregate Index, which includes the results from just over 4,000 hedge funds, fell 3.1% in September and was down 5.6% for the year through the end of the third quarter.

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Greenlight said it bought CBS because it expects there will be growing demand for its programming from cable-system operators. The income that generates should amount to "several hundred million of new earnings to CBS annually."

>>View Greenlight Capital's Portfolio

The hedge fund said the company is also finding new ways to monetize its content library, and should benefit from increased advertising spending when the economy recovers. In addition, political advertising will ramp up from 2012's presidential election.

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Greenlight bought GM on the belief that its shares are low enough that investors will be fully compensated for the possible overhang of the government's stake, which amounts to about one-third of GM's shares. The government helped bail out the nation's largest automaker in 2009. Chief rival Ford ( F), on the other hand, didn't receive a handout.

Greenlight also said it thinks GM is now free of potential pension- and health-care "legacy liabilities," and its shares are priced at the low- to mid-point of their true potential in its latest industry cycle. That's because GM is poised to return to a mid-cycle sales volumes helped by an update of its North American product line.

It also notes that GM holds $33 billion in cash, which represents "nearly its entire market capitalization," said Greenlight. Einhorn expects the company to return capital to shareholders over the next year. The hedge fund concludes that GM has "significant upside even if the U.S. experiences a very slow, 'new normal' type of economic recovery."

Greenlight said Marvell, which designs semiconductors used in cell phones and computer hard drives, is a new addition based on its relative cheapness and its protected market niche. Its shares are trading at six times its estimated 2012 earnings, net of almost $4 per share in cash.

And Greenlight expects the company will buy back 12% of its shares this year and still have about 30% of its market value in cash. "In short, this is a well-run company in structurally defensible markets that is being valued as if it is neither," said Greenlight.

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The hedge fund sold out its stake in drug giant Pfizer ( PFE) in the quarter, as it expects cuts in future government reimbursements for branded pharmaceuticals will hurt revenue. Also weighing on the shares are concerns about the recent disclosure of additional government investigations into Pfizer's marketing practices.

Also in the third quarter, Greenlight sold its stake in oil-industry giant BP ( BP) over fear of falling energy prices. The hedge fund ended a multiyear short position in Amedisys ( AMED), a home health and hospice company.

Einhorn spent a good part of the investors' letter eviscerating the business model and accounting methods of Green Mountain Coffee Roasters ( GMCR), in which his fund has a substantial short position. Green Mountain reports earnings after the close of trading today.

>>To see these stocks in action, visit the 3 New Investment Ideas From Greenlight's Einhorn portfolio on Stockpickr.
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