* Hedge fund bought Dell, Xerox in fourth quarter
* Sold out of short position in First Solar
NEW YORK, Jan 18 (Reuters) - Even though David Einhorn's Greenlight Capital finished 2011 in the black, "never has so much work gone into making 2 percent," the hedge fund manager said in a letter sent to investors on Tuesday.
In a year when volatile markets whipsawed the hedge fund industry, Greenlight outperformed competitors, gaining 2.9 percent in its Greenlight Capital LP fund. The average hedge fund fell about 5 percent last year.
Greenlight, which bets on stock prices rising and falling, added to its chest of brand-name technology stocks in the fourth quarter. It opened a new position in computer maker Dell Inc DELL.O and reopened a stake in Xerox Corp (XRX.N), the letter said.
The firm also sold out of one of its most successful bets ever, exiting its short position in First Solar Inc (FSLR.O). "This was one of the most profitable shorts in the history" of the firm, Einhorn wrote.
First Solar shares were up 8 percent in afternoon trading following the news that Greenlight had closed its bet against the company.
The hedge fund also exited significant long positions in the fourth quarter, including stakes in CVS Caremark Corp (CVS.N) and Employers Holdings Inc.
At the end of 2011, Greenlight's three biggest holdings were Apple Inc (AAPL.O), General Motors (GM.N) and gold.
(Reporting By Katya Wachtel; editing by John Wallace)
((Katya.Wachtel@thomsonreuters.com)(+1 646 223 6203)) Keywords: HEDGEFUND/EINHORN
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