David Einhorn Nails It Again!

David Einhorn

[credit provider=”AP Images”]

Hedge fund hot-shot David Einhorn, the founder of Greenlight Capital, has nailed it again.This time it’s with General Motors. 

Shares of GM were last trading up more than 7% following news that the car manufacturer said it would buy back 200 million shares from the Treasury for $27.50 each, or $5.5 billion, according to the Associated Press.

The government also plans to sell its 300 million shares starting in January, the AP reports. 

As of the third quarter ended 9/30/2012, Greenlight held 21,528,063 shares, or a 1.38% stake, in GM, according to 13F data compiled by Bloomberg.  What’s more is Greenlight had added 4,155,200 shares in Q3, the data shows. 

Back in October at the Value Investing Congress, Einhorn presented his long thesis on General Motors. 

Here’s an excerpt of our notes from that day:

He said that GM emerged from bankruptcy as a much healthier company.   

What’s more is Einhorn said that GM should buy back the government stake.  The government owns 500 million shares, he noted.  At $30 per share this stake can be purchased for $15 billion, which they can easily afford, he explained.  

Einhorn added that GM has a lot of upside in consensus earning estimates.  

Well played. 

[Via: @Convertbond]