Is David Einhorn’s Vodafone Thesis Panning Out?
Market Folly submits:
In the past we posted David Einhorn and hedge fund Greenlight Capital’s investor letter. In it, we learned that Einhorn was bullish on shares of Vodafone (VOD) as it represented one of the larger positions in Greenlight’s portfolio. Greenlight Capital of course has an impressive track record, returning 22% annualized. Einhorn’s thesis on Vodafone argues that VOD’s most valuable asset is its 45% ownership stake in Verizon Wireless. (Verizon Communications (VZ) owns the other 55%).
Previously, Vodafone had received a dividend from Verizon Wireless. However, it hasn’t received one in quite some time as Verizon Wireless’ cashflow was being used to pay back debt to Verizon Communications. Verizon Wireless is expected to be debt-free by the end of next year and this is where the catalyst component of this investment comes in. Einhorn believes the restoration of this Verizon Wireless dividend or some other transaction is highly likely. And as you’ll find out below, this may very well be the case.
Investing, Long Term Investment, stock market | admin March 30, 2010
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