By David Benoit and Rob Copeland
David Einhorn's hedge fund Greenlight Capital Inc. became the
latest big investor to call into question the corporate structure
of data-storage giant EMC Corp.
In Greenlight's quarterly letter to its investors Wednesday, Mr.
Einhorn wrote that EMC trades at a "sizable discount" because of
its conglomerate-like structure of several businesses that
"essentially operate as independent companies."
EMC runs three businesses under what it calls a "federation
strategy." There is its traditional data-storage business, its 80%
stake in VMware Inc., a pioneer in computer-server software, and
software-development company Pivotal.
Greenlight made a new "medium-sized" investment in EMC,
according to the letter, which doesn't disclose the specific size
of the stake. As of the end of June, Greenlight owned 5.9 million
EMC shares worth about $171 million, according to an earlier
filing.
The Hopkinton, Mass., company was already under pressure from
activist investor Elliott Management Corp., which had taken a
more-than 2% stake and called for it to split up. EMC's market
value currently stands at nearly $60 billion.
Separately, Mr. Einhorn has previously warned of a market
bubble, particularly in technology stocks, and wrote Wednesday that
he was increasing his short positions in what he termed "bubble
basket stocks."
He also teased a potential short position in Amazon.com Inc.,
though he stopped short of explicitly saying he was betting against
the shares.
"One of the principal bullish assumptions supporting many bubble
stocks is, 'the company is growing too fast to be very
profitable,'" he wrote. Amazon "is just one of many stocks for
which this narrative will ultimately prove false."
Mr. Einhorn also disclosed a stake in coal mining company Consol
Energy Inc.
Write to David Benoit at david.benoit@wsj.com and Rob Copeland
at rob.copeland@wsj.com
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