Greenlight's Greenlight

One fact about the stock market is that you can always find people on both sides of the coin arguing things are too high and arguing that things are too low. That is simply the way it has to be as if everyone thought stocks were too high, no one would buy and they would quickly drop to equilibrium.

So what to do? Who to listen too? I listen to people that I feel are smart. A quick list would include: Warren Buffett, Seth Klarman, David Teppler, Joel Greenblatt, Jim Chanos and David Einhorn. The beauty is that you don't need a ton of people on your list as that would only complicate things.

I subscribe to GuruFocus to see what these people are saying and holding. David Einhorn runs Greenlight Capital and was one of the early drum-beaters on the sub-prime mess and has recently called Green Mountain and First Solar over-valued. What is he saying today?

“Our current strategy is to own cheap stocks of good businesses, largely in the United States,” Greenlight said in a letter dated Jan. 17, a copy of which was obtained by Bloomberg News. “We are more net long equities than we have been in some time, as we believe that many stocks have reached a point where they are simply cheap enough to own even if some trouble awaits us.”

Think about that.

A very smart guy saying this is a time to buy, especially cheap US stocks of good businesses (sound familiar? Good companies at cheap prices). What stock does he highlight? Dell - virtually straight from MFI screen.

This has to give one comfort about plowing forward despite all the noise in the world today.

The News

Quick update as we're in full earnings season.

• FCX - I thought their earnings were solid given they had a strike at a mine in the quarter (Freeport Beats Estimates as Copper Sales Exceed Forecast).
• MSFT - Mr Softie had very solid earnings. Not a high flying stock, but one I am glad to hold (Microsoft Profit Tops Estimates on Xbox, Demand).
• INTC - had solid earnings (Intel boosts capex, beats tempered expectations). They also announced a large increase in CapEx spending. That may help the KLACs of the world.

USB had decent earnings the other day as well. But the stock is off a bit while other bank stocks are up sharply. The Fast Money crowd says there is a rotation taking place right now from the higher quality and fairly priced stocks into some of the beaten down stocks (think BAC). If that is so, that can only be good for MFI as that is a serious group of beaten down stocks.