5 Best Stocks to Buy Now According to David Einhorn’s Greenlight Capital

3. Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW)

Greenlight Capital’s Stake Value: $123,733,000

Percentage of Greenlight Capital’s Q3 Portfolio: 8.29%

Number of Hedge Fund Holders: 27

Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) is a major player in the global airfreight industry, leasing aircrafts and aerospace technology to freight, commercial, charter, and military customers. Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) stock represents 8.29% of David Einhorn’s Q3 investments, with his hedge fund holding 1.51 million shares of the company worth $123.73 million at the end of September. 

At the end of Q3, 27 hedge funds tracked by Insider Monkey were long Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW), holding stakes worth roughly $392 million. Herbert Frazier’s Hill City Capital is one of the biggest stakeholders of the company, with a $117.51 million position in the third quarter. 

Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) announced earnings for Q3 on November 3. EPS for the quarter totaled $4.88, topping estimates by $0.56. The quarterly revenue jumped 25.46% on a year-over-year basis to $1.02 billion, beating estimates by $20.13 million.

Here is what Greenlight Capital has to say about Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) in its Q2 2021 investor letter:

“Air Freight

COVID caused a dramatic reduction in passenger aviation. Passenger planes often carry freight in their bellies. With planes grounded, capacity came out of the industry. At the same time, freight demand expanded both due to the recovering economy and growing ecommerce, which often emphasizes air shipments. While there has been some recovery in passenger aviation, airlines are emphasizing narrow-body planes, which carry less freight than wide-body planes. Compared to 2019, current air freight demand is about 10% higher and capacity is about 10% lower. The result is that cargo rates have exploded.

Supply will be slow to come on-line. Some passenger planes are being converted to freighters, but conversion capacity for wide-bodies is limited and the aggregate impact of this will be modest. Meanwhile, air freight companies trade at tiny multiples of what investors assume to be peak profits. The implied cost of equity is quite high, which makes it difficult to justify adding assets. As a result, air freight companies are in no rush to order new planes, and in any case, new orders would take several years to build. The result is rates and profits are likely to be higher than expected for quite some time.

We own Atlas Air Worldwide (AAWW), which is poised to benefit. It trades at around 5x this year’s consensus earnings estimates.”