Einhorn Adds to Bearish Bets on Tech Stocks, Cites Amazon

Greenlight Capital Inc., the $10 billion hedge-fund firm run by David Einhorn, told investors it’s increasing wagers against a group of technology stocks, in a letter that discussed the lack of profitability at online retailer Amazon.com Inc.

“AMZN’s recent disappointment is notable in that for years, the story has been that AMZN isn’t profitable because it is growing so fast,” Greenlight said in a quarterly letter to clients today, referring to the stock ticker for Amazon.com. “Now growth is slowing, but rather than unleashing higher profits, the slower growth is leading to even greater losses.”

Einhorn had said in May 2012 that Amazon.com’s future is a “riddle” because the world’s largest online retailer hasn’t shown it can increase profit in tandem with sales. Amazon shares have declined 25 percent this year.

Greenlight said in April that there was a bubble in technology stocks and Einhorn the following month clarified his firm’s remarks by saying that even though some shares were overpriced, he was bullish on the industry.

In the letter today, Greenlight said it is buying a stake in storage computer-maker EMC Corp. Greenlight said the Hopkinton, Massachusetts-based firm is trading at a “sizeable discount to the sum of its parts.” The hedge-fund firm said it made a “medium-sized” investment in EMC and bought at an average price of $25.79. The shares rose 0.6 percent to $29.08 at 12:15 p.m. New York time.

Consol Stake

Greenlight said that it also bought a stake in energy company Consol Energy Inc. at an average price of $38.88, about the same price at which the shares are currently trading.

“We believe that as analysts recognize CNX’s change in asset mix from coal to gas, the shares should re-rate,” Greenlight said.

Greenlight said it divested the remainder of its short investment against Keurig Green Mountain Inc. Einhorn first criticized the company, which changed its name in March from Green Mountain Coffee Roasters Inc., at an October 2011 conference, questioning its accounting and saying the company should improve its disclosure.

“As far as we can tell everything we said about the shenanigans is unrefuted and accurate. In any case, time has passed and these misdeeds are now dated,” Greenlight said.

Shares of Green Mountain, which were at about $92 before Einhorn’s 2011 comments, were at $151.25 at 11:33 a.m. in New York trading. In a short sale, an investor sells borrowed shares to bet on a decline, hoping to buy them back cheaper and pocket the difference.

Greenlight, best known for profiting from a decline in Lehman Brothers Holdings Inc. before the bank collapsed in 2008, said it also divested its short wagers including Computer Sciences Corp., Tempur Sealy International Inc., Lululemon Athletica Inc. and Joy Global Inc.

Jonathan Gasthalter, a spokesman for Greenlight at Sard Verbinnen & Co., declined to comment on the letter.

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