In this article, we discuss the 5 best stocks to buy now according to David Einhorn’s Greenlight Capital. If you want our detailed analysis of Einhorn’s history, investment philosophy, and hedge fund performance, go directly to 10 Best Stocks to Buy Now According to David Einhorn’s Greenlight Capital.
5. Change Healthcare Inc. (NASDAQ:CHNG)
Greenlight Capital’s Stake Value: $75,108,000
Percentage of Greenlight Capital’s Q3 Portfolio: 5.03%
Number of Hedge Fund Holders: 50
David Einhorn, in Q3 2021, increased his stake in Change Healthcare Inc. (NASDAQ:CHNG) by 4%, which resulted in his hedge fund holding 3.58 million shares in Change Healthcare Inc. (NASDAQ:CHNG) at the end of September, worth $75.1 million, representing 5.03% of his total Q3 securities.
Change Healthcare Inc. (NASDAQ:CHNG), via the Change Health Platform, offers data analytics and data transfer between customers and service providers, to assist better workflows, refine administrative and financial efficiencies, and improve clinical decisions.
On November 3, Change Healthcare Inc. (NASDAQ:CHNG) announced earnings for the third quarter, with the EPS amounting to $0.35, beating estimates by $0.03. The $826.76 million revenue jumped 9.37% on a year-over-year basis, but missed estimates by $6.33 million.
Out of the 867 hedge funds tracked by Insider Monkey in the third quarter, 50 funds were long Change Healthcare Inc. (NASDAQ:CHNG).
4. Teck Resources Limited (NYSE:TECK)
Greenlight Capital’s Stake Value: $112,789,000
Percentage of Greenlight Capital’s Q3 Portfolio: 7.56%
Number of Hedge Fund Holders: 41
Engaged in mining and mineral development, Teck Resources Limited (NYSE:TECK) is a Canadian company dealing in coal, zinc, lead, silver, gold, and copper, among other secondary products. Increasing his stake in Teck Resources Limited (NYSE:TECK) by 12% by the end of September, David Einhorn holds 4.52 million shares of the company worth $112.78 million.
Teck Resources Limited (NYSE:TECK) posted on October 27 its Q3 results, reporting earnings per share of $1.52, exceeding estimates by $0.34. Revenue for the period came in at $3.21 billion, up 84.60% on a year-over-year basis, beating estimated revenue by almost $269 million.
On December 7, BMO Capital analyst Jackie Przybylowski lowered the price target on Teck Resources Limited (NYSE:TECK) to C$53 from C$56 and kept an Outperform rating on the shares.
Jacob Mitchell’s Antipodes Partners is the leading stakeholder of Teck Resources Limited (NYSE:TECK) from Q3, holding a $179.65 million stake in the company. Overall, 41 hedge funds in the third quarter database of Insider Monkey were bullish on Teck Resources Limited (NYSE:TECK), holding total stakes amounting to $1.31 billion.
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.”
2. Brighthouse Financial, Inc. (NASDAQ:BHF)
Greenlight Capital’s Stake Value: $177,302,000
Percentage of Greenlight Capital’s Q3 Portfolio: 11.88%
Number of Hedge Fund Holders: 29
Brighthouse Financial, Inc. (NASDAQ:BHF), a major American provider of annuities and life insurance, is one of the best stocks to buy now according to David Einhorn’s Greenlight Capital, with the hedge fund increasing its position in Brighthouse Financial, Inc. (NASDAQ:BHF) by 8% in the third quarter. Greenlight Capital owns 3.92 million shares of the company as of September, worth $177.3 million.
On December 2, Goldman Sachs analyst Alex Scott initiated coverage of Brighthouse Financial, Inc. (NASDAQ:BHF) with a Neutral rating and a $57 price target.
Brighthouse Financial, Inc. (NASDAQ:BHF) reported earnings for the quarter ending September on November 4. EPS over the period equaled $5.41, exceeding estimates by $1.88. The quarterly revenue came in at $2.42 billion, beating estimates by $196 million.
Arrowstreet Capital owns a $68.3 million position in Brighthouse Financial, Inc. (NASDAQ:BHF) as of Q3, which makes it one of the leading stakeholders of the company, out of a total of 29 hedge funds that were bullish on Brighthouse Financial, Inc. (NASDAQ:BHF) in the third quarter.
Here is what Greenlight Capital has to say about Brighthouse Financial, Inc. (NASDAQ:BHF) in its Q3 2021 investor letter:
“BHF reported what can only be called a stupendous result. BHF had adjusted operating earnings of $5.05 per share during the quarter compared to estimates of $3.28 per share. Full-year consensus moved from $13.75 to $16.18. The stock fell about 1% during the quarter to close at $45.23.
There is more to the story. BHF’s core business is variable annuities and to a lesser extent life insurance. But it also has something called a “closed block,” which is a bunch of legacy businesses that MetLife burdened BHF with at the time of the spin-off. These are business lines which are no longer being originated. BHF has them contained in a Delaware subsidiary for which there is minimal financial disclosure.
Skeptical investors have worried that this subsidiary could be a “black hole” that will drain the value from the rest of BHF. Well, something very strange happened to that theory this quarter: the regulators approved a $600 million dividend out of the Delaware subsidiary. Management, true to form, has given no hints as to what extent there will be more dividends to come.
To us, it seems that what was suspected to be a “black hole” is actually a “cookie jar.” We just don’t know how many cookies are in the jar. Either way, the consensus view that the run-off business will be a drain ought to be discarded.
$600 million is a lot of money. To BHF, it equates to more than $7 per share. Nobody expected this development. There are 11 analysts following BHF (1 buy, 7 holds, 3 sells), and not one of them changed their view of value based on this announcement. Moreover, one would think that if you found $600 million under the mattress, you would count that and ask whether anyone checked the couch cushions as well. But, as David noted, companies can report stupendous news…
We could go on and detail the quarterly results of several other companies in our portfolio, but we don’t wish to overkill the point.
It’s more productive to discuss how we think this situation will resolve itself. Share repurchases over time will unlock the value. We just don’t know when the market will notice. Going back to the BHF example, the company has already shrunk its share count by 30% from 120 million to 84 million. This has helped take stated book value per share from $120 to $175. In the most recent quarter, BHF authorized another $1 billion in buybacks, which is about a quarter of the company at the current price. As BHF continues in this fashion, eventually either the shares will re-rate or there won’t be many left.
We continue to hold the quaint view that shares represent a fractional ownership of a business. As the denominator of shares goes down, the fraction of the business that each share represents goes up. There are several companies in our portfolio, BHF included, that appear poised to return their current market caps to shareholders over the next few years.”
1. Green Brick Partners, Inc. (NASDAQ:GRBK)
Greenlight Capital’s Stake Value: $357,431,000
Percentage of Greenlight Capital’s Q3 Portfolio: 23.96%
Number of Hedge Fund Holders: 16
Green Brick Partners, Inc. (NASDAQ:GRBK) is the largest holding in David Einhorn’s Q3 portfolio, and the hedge fund manager believes that the stock is an excellent hedge against increasing inflation. Greenlight Capital holds a $357.43 million position in Green Brick Partners, Inc. (NASDAQ:GRBK), which represents 23.96% of the fund’s total 13F securities. Green Brick Partners, Inc. (NASDAQ:GRBK) is a Texas-based diversified land development and home building company.
On October 14, JPMorgan analyst Michael Rehaut downgraded Green Brick Partners, Inc. (NASDAQ:GRBK) to Neutral from Overweight with a price target of $28, down from $32, maintaining a constructive stance on the homebuilding sector.
Green Brick Partners, Inc. (NASDAQ:GRBK) posted Q3 earnings on November 2. EPS in the period equaled $0.95, missing estimates by -$0.10. The quarterly revenue totaled $343.34 million, up 24.12% year-over-year, yet missing estimates by $26.02 million.
Springbok Capital is one of the leading Green Brick Partners, Inc. (NASDAQ:GRBK) stakeholders from September, with 850,681 shares worth $17.45 million. Overall, 16 hedge funds in the Q3 database of Insider Monkey reported owning stakes in Green Brick Partners, Inc. (NASDAQ:GRBK), up from 14 funds in the preceding quarter.
Here is what Diamond Hill Small Cap Fund has to say about Green Brick Partners, Inc. (NASDAQ:GRBK) in its Q3 2021 investor letter:
“Homebuilder Green Brick Partners has benefited from strong housing demand leading to higher prices. However, rising interest rates, as we saw in Q3, tend to be an industry-wide headwind, just as supply chain challenges delayed home closings, pushing back revenue to later quarters. Longer term, our thesis on Green Brick remains unchanged. We believe it is one of the best positioned small-cap housing companies, with attractive real estate, a strong balance sheet and a strong, shareholder-aligned management team that has been a wise allocator of capital.”
You can also take a look at David Zorub’s Parsifal Capital Management’s Top 10 Stocks and 10 Best Gold Stocks with Dividends.
