General Motors Buyback Plan Attracts Einhorn's Greenlight Capital

General Motors Company GM's plan to buy back $5 billion in shares helped convince hedge fund manager David Einhorn to take a renewed stake in the automaker.

Einhorn's Greenlight Capital Fund outlined the new stake in a letter to shareholders Monday that acknowledged Greenlight's "uneventful and unprofitable quarter."

The hedge fund posted a 1.7 percent first-quarter return.

But Einhorn's first-quarter holdings in Apple Inc. AAPL and Sunedison Inc. SUNE outperformed the market, with Apple gaining 13 percent in the quarter and Sunedison up 23 percent.

General Motors last month announced the buyback plan in response to demands of activist investor Harry J. Wilson, who previously helped restructure GM as part of a government backed bailout.

"We decided to take another drive in General Motors," Einhorn told shareholders, noting that his fund sold a stake in the company last year with disappointing results.

Einhorn said GM "is a year closer to eliminating its losses in Europe," while raw materials are relatively cheap and low gas prices may boost pickup trucks and sport-utility vehicle sales.

"Finally, GM has acknowledged it might not need quite so much cash lying around earning zero interest," Einhorn said of the buyback plan.

Until bowing to Wilson recently, GM executives had vowed to maintain a "fortress balance sheet" since shortly after it emerged from bankruptcy in 2009.

Greenlight paid $34.62 a share for its latest GM stake. Shares traded recently at $37.15, up 1.4 percent.