In this article, we discuss the 10 best stocks to buy now according to David Einhorn’s Greenlight Capital. If you want to skip our detailed analysis of Einhorn’s history, investment philosophy, and hedge fund performance, go directly to 5 Best Stocks to Buy Now According to David Einhorn’s Greenlight Capital.
David Einhorn is an American investor and hedge fund manager who founded Greenlight Capital in 1996, and currently serves as the president of the hedge fund. Greenlight Capital is classified as a value-oriented fund. It manages around $1.5 billion in 13F securities as of the third quarter. Einhorn’s Q3 portfolio is concentrated in the transport, materials, information technology, industrials, finance, and consumer discretionary sectors.
Einhorn graduated from Cornell University with a Bachelor’s degree in 1991, and started running his own hedge fund shortly after. He is recognized for assessing market situations ahead of time. He shorted the Lehman Brothers stock in 2007, on the premise that the company is using dubious accounting practices. Einhorn’s claims were considered to be correct, when a year later, Lehman Brothers declared bankruptcy after heavy litigation.
Similarly, after the rising inflation in the second half of 2021, Einhorn has gone on record to say that his largest stock holding from Q3, Green Brick Partners, Inc. (NASDAQ:GRBK), is definitely an extraordinary position, since it is a strategic hedge against increasing inflation. As a home builder and land developer in the United States, Einhorn sees investors gravitating towards the Green Brick Partners, Inc. (NASDAQ:GRBK) stock, which is trading at six times this year’s earnings, with a compound revenue growth rate of 28%. A commodity ETF tracking the price of silver, iShares Silver Trust (NYSE:SLV), was another bet of Einhorn against inflation in the third quarter, with the stock being a new arrival in his Q3 portfolio.
The investor also increased his stake in Sonos, Inc. (NASDAQ:SONO), a manufacturer of multi-room audio products, by 55% in the third quarter. Einhorn stated that big tech companies like Alphabet Inc. (NASDAQ:GOOG) are infringing on the patents of Sonos, Inc. (NASDAQ:SONO), and when the company is able to finally license those patents, it will generate a revenue stream with high margins and these estimates are not factored into the stock valuation yet. The company has a quality product that will result in growth prospects, hence the investment is in line with Einhorn’s value investing strategy.
David Einhorn of Greenlight Capital
The most notable stocks in David Einhorn’s Q3 portfolio include GoPro, Inc. (NASDAQ:GPRO), Twitter, Inc. (NYSE:TWTR), PLBY Group, Inc. (NASDAQ:PLBY), and Victoria’s Secret & Co. (NYSE:VSCO), among others discussed in detail below.
Our Methodology
We used the Q3 portfolio of David Einhorn’s Greenlight Capital to select his 10 best stock picks, ranking the stocks according to Einhorn’s stake value in each holding.
For further information on each company, we have mentioned the Q3 earnings, analyst ratings, and the hedge fund sentiment around each stock.
Best Stocks to Buy Now According to David Einhorn’s Greenlight Capital
10. Danimer Scientific, Inc. (NYSE:DNMR)
Greenlight Capital’s Stake Value: $38,532,000
Percentage of Greenlight Capital’s Q3 Portfolio: 2.58%
Number of Hedge Fund Holders: 21
Danimer Scientific, Inc. (NYSE:DNMR), a sustainable biopolymer manufacturer and one of the leading innovators in plastics biotechnology, is a top stock in David Einhorn’s portfolio, with the hedge fund manager increasing his stake in the company by 12% in the third quarter. Greenlight Capital holds 2.35 million Danimer Scientific, Inc. (NYSE:DNMR) shares, worth $38.53 million, with the stock accounting for 2.58% of the firm’s total Q3 investments.
Danimer Scientific, Inc. (NYSE:DNMR)’s Q3 revenue missed estimates by $1.20 million.
According to Jefferies analyst Laurence Alexander, the Q3 sales were $4.4 million lower than his forecast, and operating costs and capex were also running higher than estimated figures. Alexander still believes that the stock’s “overall trends appear on track”, lowering the price target on Danimer Scientific, Inc. (NYSE:DNMR) to $30 from $34 and keeping a Buy rating on the shares on November 16.
At the end of the third quarter, 21 hedge funds in the database of Insider Monkey were bullish on Danimer Scientific, Inc. (NYSE:DNMR), down from 30 funds in the preceding quarter.
In addition to GoPro, Inc. (NASDAQ:GPRO), Twitter, Inc. (NYSE:TWTR), PLBY Group, Inc. (NASDAQ:PLBY), and Victoria’s Secret & Co. (NYSE:VSCO), Danimer Scientific, Inc. (NYSE:DNMR) is a notable stock in David Einhorn’s Q3 portfolio.
Here is what Nelson Capital Management has to say about Danimer Scientific, Inc. (NYSE:DNMR) in its Q1 2021 investor letter:
“In the materials sector, we bought Danimer Scientific (tkr: DNMR), a next-generation bioplastics company offering completely biodegradable plastics that break down in virtually any environment.
While essential to modern life, plastic products are an ongoing environmental concern due to their longevity and therefore the pollution that results. Despite nationwide efforts to recycle plastics, only 8.5% of plastics waste in the U.S. is being recycled, according to a study by the U.S. Environmental Protection Agency. Danimer Scientific (t k r: DNMR) has developed a method to make plastic products that are 100% biodegradable and compostable without compromising on functionality. The company sells its PHA- based plastics under the brand name Nodax and is currently the only viable commercial-scale offering.
Danimer uses canola oil to create 100% biodegradable and compostable biopolymer, PHA, through a completely waste-free process. PH A biodegrades in both anaerobic (without oxygen) and aerobic (with oxygen) environments, and unlike other biodegradable plastics, it does not need heat, moisture, or an industrial composting plant to break down. PHA-based plastics can effectively biodegrade in a waste treatment facility, the ocean, or even in home compost piles within 12-18 weeks after the product is discarded.
PHA plastics are versatile, adaptable and heat and UV-resistant. They have been FDA approved for food contact and are comparable in functionality to many products produced using petrochemicals. The formula can be customized to create many types of plastic resins for a multitude of purposes. The range of applications for products made with PH A is enormous and includes straws, cups, lids, bottles, produce bags, shopping bags, utensils, diaper linings, plates, wipes, toys, trash bags, seals, labels, glues and much more.
Danimer went public in late 2020 via Special Purpose Acquisition Company (SPAC). As a newly public company, Danimer’s stock price tends to be rather volatile, but we bought a small position for the long-term opportunities it offers. Dem and for PHA plastics is likely to accelerate over the next several years as corporations and the public become increasingly concerned about the environmental impact of wrappers from consumer- packaged goods. More government regulation of single- use plastics has pressured large corporations to adapt. Additionally, the Biden administration has a strong emphasis on climate change and sustainability which will provide a near- to-mid-term tailwind for Danimer. As the leading PHA innovator with over 125 patents across 20 countries, Danimer is well-positioned to benefit from these trends.”
9. The ODP Corporation (NASDAQ:ODP)
Greenlight Capital’s Stake Value: $46,061,000
Percentage of Greenlight Capital’s Q3 Portfolio: 3.08%
Number of Hedge Fund Holders: 21
The ODP Corporation (NASDAQ:ODP) is a Florida-based company offering office supplies and furniture via a chain of retail stores, e-commerce websites, and a B2B sales network. Greenlight Capital increased its position in The ODP Corporation (NASDAQ:ODP) by 78% in the third quarter, owning 1.14 million shares worth roughly $46 million, representing 3.08% of the fund’s total Q3 portfolio.
Parag Vora’s HG Vora Capital Management is the leading stakeholder of The ODP Corporation (NASDAQ:ODP) as of Q3 2021, with 5 million shares valued at $200.8 million. Overall, 21 hedge funds in the database of elite funds tracked by Insider Monkey reported owning stakes in The ODP Corporation (NASDAQ:ODP) at the end of September, worth $429.70 million.
The ODP Corporation (NASDAQ:ODP), on November 3, posted its Q3 earnings. EPS in the quarter totaled $1.76, beating estimates by $0.33. The quarterly revenue equaled $2.18 billion, down 14.18% year-over-year, missing estimates by $94.39 million.
On November 16, The ODP Corporation (NASDAQ:ODP) announced that as part of its ongoing commitment to drive shareholder value in support of its strategic initiatives, its board authorized a $150 million increase in the existing $300 million accelerated stock repurchase program, which now equals $450 million.
8. Concentrix Corporation (NASDAQ:CNXC)
Greenlight Capital’s Stake Value: $47,083,000
Percentage of Greenlight Capital’s Q3 Portfolio: 3.15%
Number of Hedge Fund Holders: 21
Concentrix Corporation (NASDAQ:CNXC) reported earnings for the period ending August 2021 on September 27. The company announced an EPS of $2.49, beating estimates by $0.25. The revenue over the period was $1.40 billion, exceeding estimates by $15.06 million.
Concentrix Corporation (NASDAQ:CNXC) is one of the top stock picks of David Einhorn in the third quarter, with his hedge fund holding 266,009 shares of the company, worth approximately $47 million, which accounts for 3.15% of the total Q3 portfolio. Concentrix Corporation (NASDAQ:CNXC) offers services to organizations that drive customer engagement and business performance.
After the Q3 results, Barrington analyst Vincent Colicchio raised the price target on Concentrix Corporation (NASDAQ:CNXC) to $202 from $182 and kept an Outperform rating on the shares.
Lyrical Asset Management is the largest stakeholder of Concentrix Corporation (NASDAQ:CNXC), holding 983,509 shares worth $174 million. Overall, 21 hedge funds in the Q3 database of Insider Monkey were long Concentrix Corporation (NASDAQ:CNXC), holding stakes valued at $586.85 million.
Here is what FPA Queens Road Small Cap Value Fund has to say about Concentrix Corporation (NASDAQ:CNXC) in its Q3 2021 investor letter:
“Concentrix, a customer experience solutions provider spun off from one of our other portfolio holdings (Synnex) in December of 2020, rose during the quarter. Boasting a broadly diversified customer base, the company offset weakness in Covid-impacted segments with strong performance in finance, e-commerce, and healthcare.”
7. CONSOL Energy Inc. (NYSE:CEIX)
Greenlight Capital’s Stake Value: $55,137,000
Percentage of Greenlight Capital’s Q3 Portfolio: 3.69%
Number of Hedge Fund Holders: 15
CONSOL Energy Inc. (NYSE:CEIX) is an American energy company with interests vested in coal mining. Greenlight Capital owns 2.11 million shares of CONSOL Energy Inc. (NYSE:CEIX), worth $55.1 million, representing 3.69% of the total Q3 investments.
At the end of September, 15 hedge funds in the database of Insider Monkey were bullish on CONSOL Energy Inc. (NYSE:CEIX), worth $109.44 million. This is an increase as compared to 13 funds in the preceding quarter, with total stakes amounting to almost $66 million. Encompass Capital Advisors is one of the leading stakeholders of CONSOL Energy Inc. (NYSE:CEIX), holding a $14.79 million position in the company.
On November 2, CONSOL Energy Inc. (NYSE:CEIX) announced its Q3 results, posting an EPS of -$0.14, missing estimates by -$0.78. The $149.01 million revenue was down 38.73% on a year-over-year basis, also missing estimates by $157.04 million.
B. Riley analyst Lucas Pipes on October 4 raised the price target on CONSOL Energy Inc. (NYSE:CEIX) to $35 from $24 and kept a Buy rating on the shares, citing rising gas prices in North America.
In addition to CONSOL Energy Inc. (NYSE:CEIX), hedge funds like Greenlight piled into GoPro, Inc. (NASDAQ:GPRO), Twitter, Inc. (NYSE:TWTR), PLBY Group, Inc. (NASDAQ:PLBY), and Victoria’s Secret & Co. (NYSE:VSCO) in 2021.
Here is what Greenlight Capital has to say about CONSOL Energy Inc. (NYSE:CEIX) in its Q2 2021 investor letter:
“Thermal Coal and Natural Gas
ESG investing is inflationary, as green energy is simply more expensive than hydrocarbons. Hydrocarbon energy companies are starved for capital and are being told to change their ways. The result is less exploration and drilling. Even with benchmark oil prices surging over the last year, companies are loath to drill more. Normally, the cure for high prices is high prices. With ESG in the proverbial driver’s seat, we might still need much higher prices in order to increase investment to meet demand.
There is almost nothing less popular than thermal coal. From 2011 to 2020, U.S. coal production declined by 51%. U.S. demand has fallen as we’ve shifted to alternative sources of electricity. As unpopular as coal is though, it still makes up about 20% of U.S. electricity generation. Globally, coal demand is growing modestly as China and India add power generation capacity faster than the West is reducing it. Even so, reduced oil and gas drilling has caused natural gas prices to advance and coal prices are following. Seaborne thermal coal prices are up 140% year-over-year and at the highest levels since 2011, and Northern Appalachia thermal coal prices are catching up, rising 23% in the last month alone.
We own CONSOL Energy (CEIX), the lowest cost, most efficient miner in Appalachia, which is poised to benefit from rising coal prices. It trades at 12x consensus earnings estimates that look stale to us, as they do not reflect recent coal price gains.”
6. The Chemours Company (NYSE:CC)
Greenlight Capital’s Stake Value: $67,489,000
Percentage of Greenlight Capital’s Q3 Portfolio: 4.52%
Number of Hedge Fund Holders: 38
The Chemours Company (NYSE:CC), an American chemical company, is one of the best stocks to buy now according to David Einhorn’s Greenlight Capital. Greenlight Capital held 2.32 million shares in The Chemours Company (NYSE:CC) in the third quarter, worth $67.48 million, representing 4.52% of the total Q3 portfolio.
John Petry’s Sessa Capital is the largest stakeholder of The Chemours Company (NYSE:CC) in Q3 2021, with 8.87 million shares worth approximately $258 million. Overall, 38 hedge funds in Insider Monkey’s database of 867 elite funds were bullish on The Chemours Company (NYSE:CC) in the third quarter, with total stakes amounting to $548.9 million.
The Chemours Company (NYSE:CC), on November 4, announced earnings for Q3 2021. EPS in the quarter totaled $1.27, exceeding estimates by $0.25. Revenue for the period came in at $1.68 billion, up 36.25% year-over-year, outperforming estimates by $99.91 million.
RBC Capital analyst Arun Viswanathan on November 8 raised the price target on The Chemours Company (NYSE:CC) to $45 from $40 and kept an Outperform rating on the shares after the Q3 earnings beat and FY21 guidance raise.
In addition to GoPro, Inc. (NASDAQ:GPRO), Twitter, Inc. (NYSE:TWTR), PLBY Group, Inc. (NASDAQ:PLBY), and Victoria’s Secret & Co. (NYSE:VSCO), The Chemours Company (NYSE:CC) is a notable stock in David Einhorn’s Q3 portfolio.
Here is what Miller Value Partners has to say about The Chemours Company (NYSE:CC) in its Q3 2021 investor letter:
“The Chemours Co (CC) dropped 15.9% over the period. The company reported Q2 revenue of $1.7Bn, topping consensus of $1.54Bn and rising +51% Y/Y driven by +46% volume growth while price and foreign exchange (FX) added +6%. EBITDA of $366M beat by 11% on increased volumes while FCF of $189M (+278% Y/Y) drove $13M of stock buybacks and $20M of debt paydown. Management expects FY21 EBITDA and earnings per share (EPS) to come in at the high-end of prior guidance, or $1.25Bn and $3.56, respectively with FCF exceeding $450M. Additionally, Chemours announced a settlement with the State of Delaware regarding all chemical cleanup and environmental remediation for the state.”
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Disclosure: None. 10 Best Stocks to Buy Now According to David Einhorn’s Greenlight Capital is originally published on Insider Monkey.
