David Einhorn's Greenlight Capital Inc. bought Xerox Corp. (XRX) and Dell Inc. (DELL) shares during the fourth quarter and cashed in its bet against First Solar Inc. (FSLR), delivering returns that helped it eke out modest gains for the year.

The hedge fund manager, famous for his criticism of Lehman Brothers just before its collapse, said in his quarterly letter to shareholders he "found very few places to make money" but "kept mistakes to a minimum" in 2011, a year that industry adviser Hennessee Group LLC said was the worst since 2008.

"Never has so much work gone into making 2%," Einhorn said in the letter. "For all its ups and downs, dramatic headlines, and extremely high daily volatility, the market ended the year just about where it started."

In 2011, Greenlight Capital LP returned 2.9%. Two other hedge funds, Greenlight Capital Qualified LP and Greenlight Capital Offshore, returned 2.7% and 1.9%, respectively.

In the same period, the Hennessee Hedge Fund Index, a benchmark for the sector, dropped 4.27%.

Greenlight was impressed by Dell buying back shares last year while its valuation was relatively low, as well as the company's effort to broaden its offerings beyond personal computers, according to the letter. Einhorn noted Xerox's stock repurchasing and its success securing technology outsourcing contracts.

Among companies in which Greenlight had short positions, Green Mountain Coffee Roasters Inc. (GMCR) and First Solar were the "two significant winners" in the latest quarter, the letter said. Short sellers borrow stock and then sell it, betting that the price of the shares will fall and they can buy them back at a lower price for return to the lender.

In October, Einhorn delivered a 110-slide presentation outlining his concerns about the health of Green Mountain. The company's stock plunged in the wake of his critique, which questioned the company's accounting, transparency and business practices.

Greenlight closed its short position in First Solar, "one of the most profitable shorts in the history" of its funds, the letter said. It also exited a bet against Diamond Foods Inc. (DMND), the Pringles snacks maker whose $1.5 billion purchase by Procter & Gamble Co. (PG) has been held up by an accounting investigation.

Some of the letter's content was reported earlier by CNBC.

-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240; matthew.jarzemsky@dowjones.com

Lehman (NYSE:LEH)
Historical Stock Chart
From Mar 2024 to Apr 2024 Click Here for more Lehman Charts.
Lehman (NYSE:LEH)
Historical Stock Chart
From Apr 2023 to Apr 2024 Click Here for more Lehman Charts.