Greenlight exits Dell, Best Buy after weak quarter

SAN FRANCISCO (MarketWatch) � David Einhorn�s Greenlight Capital Inc. reported a loss of 3.2% in the second quarter, due in part to the ongoing European crisis and bad calls on Dell Inc. and Best Buy Co.

�It is hard to blame the current European leaders for their inability to solve a crisis that has no real solution. Even the very best options range from awful to awful, so no one should be surprised when the political choice is �None of the above. Let�s put out a communique and hope that no one notices,�� Greenlight said in an investor letter posted on ValueWalk, a website dedicated to hedge-fund news.

Click to Play Is this earnings season the worst since 2009?

Earnings are expected to slide this season, leading to what could be the worst season since 2009. But a big quarter from Apple might change everything around, as Steven Russolillo reports on Markets Hub. Photo: Bloomberg.

During the same period, the S&P 500 SPX �dropped 3.3% while the Dow Jones Industrial Average DJIA �fell 2.5% and the Nasdaq Composite COMP �retreated 5.1%.

Greenlight also exited both Dell DELL �and Best Buy BBY �at a loss.

�Dell proved to be a disappointment. We had thought that the growth in the non-PC business would be enough to offset the deterioration in the PC business. The non-PC growth was smaller than we�d hoped and the PC deterioration was worse than we anticipated,� said Greenlight.

Describing Best Buy as �particularly irksome,� Greenlight said the retailer saw a deterioration in both its domestic and international performance and may undergo more disruptions as it attempts to identify a new strategy.

Greenlight, meanwhile, said some of its best performers from the first quarter such as General Motors Co. GM �and its position in the Japanese yen were the biggest laggards in the second quarter.

Marvell Technology Group MRVL �was another big loser but Greenlight increased its stake in the company, noting that Marvell may use its excess cash to aggressively buy back shares.

Greenlight revealed substantial short positions in the managed care sector, most notably Cigna Corp. CI �and Coventry Health Care Inc. CVH .

�The entire sector has been battered in anticipation of Obamacare,� said Greenlight, referring to the 2010 health-care legislation known as the Affordable Care Act.

�They [Cigna and Coventry] have no exposure to the European currency crisis, a possible Chinese slowdown or other cyclical headwinds,� it noted.

Notwithstanding a dismal quarter, Greenlight still posted a net return of 3.4% for the year.