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The Morning Brief: Greenlight Likes Lam Research

David Einhorn’s Greenlight Capital made what it calls a “medium-size new investment” in Lam Research Corporation in the second quarter. The New York–based hedge fund firm tells clients in a letter dated July 25 that the semiconductor capital equipment maker benefits from the evolution toward smaller and smaller transistors. The hedge fund also likes three other technology stocks despite its earlier, headline-making concerns about a possible bubble in momentum stocks, which include many tech and Internet stocks. Its other favorites include Apple and Micron Technology, two big winners in the second quarter, and Marvell Technology, a long-time major holding.

Greenlight also said it closed out several positions in the second quarter. For example, it says its thesis for better returns and multiple expansion played out over several years at Aspen Insurance Holdings, while shares reached full value at Rite Aid. As for the second quarter, the fund gained 7.9 percent, bringing the return for the year to 6.4 percent. Gains came from Apple and Micron as well as from SunEdison, Netherlands-based Altice, Japan-based Resona and Oil States International and its spinoff Civeo. Interestingly, Greenlight said it was hurt by short positions in companies that made acquisitions, include Safeway, Martin Marietta Materials, Lorillard and Questcor Pharmaceuticals.

Boston-based hedge fund firm Adage Capital Partners disclosed its owns 8.68 percent of TerraForm Power, a subsidiary of solar power company SunEdison that went public on July 23. The filing was made in a 13G, meaning the investment is passive.

Herbalife has brought on Alan Hoffman to serve in a new role of executive vice president of global corporate affairs. The former deputy chief of staff to vice president Joseph Biden and deputy assistant to President Barack Obama is apparently expected to helped the company fend off Pershing Square Capital Management founder William Ackman’s attack, drawing on Hoffman’s more than 20 years of public policy, communications and government affairs experience. “We are confident that he has the experience and credentials to help us powerfully communicate the value Herbalife brings to our consumers, members, shareholders and communities,” states Michael Johnson, Herbalife’s chairman and CEO, in a press release.

Shares of hedge fund favorite dropped nearly 10 percent, to $324.01, after the e-commerce giant reported revenue that was mostly in line with Wall Street forecasts but issued guidance for a much bigger loss for the current quarter than investors were preparing for. The stock collapse is especially significant given that investors for years were comfortable with the notion that Amazon doesn’t report operating earnings.

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