David Einhorn: These 4 Tech Stocks Are Not in a Bubble

Man uses an Apple iPhone in Tokyo, Japan on July 16, 2014

While bubble talk is everywhere in the market these days, that doesn’t necessarily mean everything is a bubble. David Einhorn, president and founder of Greenlight Capital, raised concerns earlier this year about an echo bubble taking place in technology. Some people believed he claimed the entire sector was looking dangerous, but some of his most popular holdings are tech names.

Einhorn recently issued his quarterly letter to investors and clarified his views. “In our last quarterly letter, we wrote about the bubble in momentum stocks, most of which are in the technology sector. The media latched onto a single sentence embedded in a lengthy discussion about ‘cool kid’ stocks and suggested that we were declaring all technology stocks to be in a bubble,” writes Einhorn. “Nothing could be further from the truth. Many of our largest long positions are in technology, and we are not holding them with a cynical view that we want to play a bubble.”

In order to play the bubble in certain momentum stocks, Einhorn created a basket of companies to short. At this year’s Sohn Investment Conference, he presented Athenahealth (NASDAQ:ATHN) as one company to bet against. However, Einhorn is long four tech companies that have “strong prospects” and are “undervalued.”