In this article, we discuss the top 5 small-cap stocks to buy according to David Einhorn’s Greenlight Capital. If you want our detailed analysis of these stocks, go directly to 10 Small-Cap Stocks to Buy According to David Einhorn’s Greenlight Capital.
5. GoPro, Inc. (NASDAQ:GPRO)
Greenlight Capital’s Stake Value: $34,303,000
Percentage of Greenlight Capital’s 13F Portfolio: 2.30%
Number of Hedge Fund Holders: 31
Market Capitalization as of December 4: $1.541 billion
An American tech company manufacturing and marketing action cameras, video editing software, and mobile applications, GoPro, Inc. (NASDAQ:GPRO) is one of the top small-cap stocks in Einhorn’s portfolio for the third quarter. Greenlight Capital owns 3.66 million GoPro, Inc. (NASDAQ:GPRO) shares, worth $34.3 million, representing 2.3% of the firm’s total investments.
At the end of September, 31 hedge funds reported owning stakes in GoPro, Inc. (NASDAQ:GPRO), worth over $293 million. This is compared to 28 funds being bullish on GoPro, Inc. (NASDAQ:GPRO) in the preceding quarter, with total stakes amounting to $413.7 million. Michael Zimmerman’s Prentice Capital Management is the largest shareholder of the company, with a position worth approximately $64 million.
On November 4, GoPro, Inc. (NASDAQ:GPRO) reported its Q3 results, posting an EPS of $0.34, beating estimates by $0.14. The revenue equaled $316.67 million, up 12.89% from the prior-year quarter, outperforming estimates by $24.58 million.
JPMorgan analyst Paul Chung on November 18 upgraded GoPro, Inc. (NASDAQ:GPRO) to Overweight from Neutral with a price target of $15, up from $13, citing price increases, strong strategic execution, and a high subscriber count.
Here is what Roubaix Capital has to say about GoPro, Inc. (NASDAQ:GPRO) in their Q4 2020 investor letter:
“Companies like GoPro (GPRO) should benefit from the consumer rebound, but also have their own unique drivers of value over the next 2+ years. In the case of GPRO, the company launched its newest action camera, the GoPro9, under the umbrella of a new business model. The company offers a discount on the camera when customers purchase a subscription agreement that comes with additional services and benefits. The uptake of the subscription has been strong to date and offers the company a line of sight to a higher margin and more predictable revenue stream. The stock’s low double digit earnings multiple remains undemanding. We have seen this type of transformation play out in numerous situations in software, hardware and even retail companies such as RH. We see GPRO following suit and expect a return to travel later this year to be another reason for consumers to buy a new camera as they head back out on vacation.”
4. Danimer Scientific, Inc. (NYSE:DNMR)
Greenlight Capital’s Stake Value: $38,532,000
Percentage of Greenlight Capital’s 13F Portfolio: 2.58%
Number of Hedge Fund Holders: 21
Market Capitalization as of December 4: $1.088 billion
David Einhorn increased his stake in Danimer Scientific, Inc. (NYSE:DNMR), a sustainable biopolymer manufacturer, by 12% in the third quarter. Einhorn holds 2.35 million shares in Danimer Scientific, Inc. (NYSE:DNMR), worth $38.5 million, representing 2.58% of his total Q3 securities.
At the end of the third quarter of 2021, 21 hedge funds in the database of Insider Monkey were long Danimer Scientific, Inc. (NYSE:DNMR), down from 30 funds in the preceding quarter.
Danimer Scientific, Inc. (NYSE:DNMR) posted its Q3 results on November 15. The EPS amounted to -$0.15, missing estimates by -$0.06. Revenue for the period totaled $13.37 million, missing analysts’ consensus revenue estimates by $1.20 million.
After the Q3 earnings miss, Jefferies analyst Laurence Alexander on November 16 lowered the price target on Danimer Scientific to $30 from $34 and kept a Buy rating on the shares, stating that overall trends for the company appear to be on track.
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 t he 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.”
3. The ODP Corporation (NASDAQ:ODP)
Greenlight Capital’s Stake Value: $46,061,000
Percentage of Greenlight Capital’s 13F Portfolio: 3.08%
Number of Hedge Fund Holders: 21
Market Capitalization as of December 4: $1.909 billion
In the third quarter of 2021, David Einhorn increased his position in The ODP Corporation (NASDAQ:ODP) by 78%, owning 1.14 million shares in the company, worth $46 million. The ODP Corporation (NASDAQ:ODP) accounts for 3.08% of Einhorn’s Q3 13F portfolio.
The ODP Corporation (NASDAQ:ODP), an office supply retailing company from Florida, posted on November 3 its Q3 earnings. EPS in the quarter equaled $1.76, beating estimates by $0.33. Revenue for the period amounted to $2.18 billion, down 14.18% year-over-year, missing estimates by $94.39 million.
Of the 21 hedge funds that were bullish on The ODP Corporation (NASDAQ:ODP) in the third quarter, Parag Vora’s HG Vora Capital Management is the biggest stakeholder of the company, holding 5 million shares worth $200.8 million.
2. CONSOL Energy Inc. (NYSE:CEIX)
Greenlight Capital’s Stake Value: $55,137,000
Percentage of Greenlight Capital’s 13F Portfolio: 3.69%
Number of Hedge Fund Holders: 15
Market Capitalization as of December 4: $745.462 million
CONSOL Energy Inc. (NYSE:CEIX), an American energy company focused on coal mining and natural gas, represents 3.69% of Greenlight Capital’s Q3 portfolio. The hedge fund holds 2.11 million shares in CONSOL Energy Inc. (NYSE:CEIX) as of September this year, worth $55.1 million. Einhorn reduced his stake in the company by 3% in Q3.
On November 2, CONSOL Energy Inc. (NYSE:CEIX) announced its Q3 results, posting an EPS of -$0.14, missing estimates by -$0.78. The quarterly revenue totaled $149.01 million, down 38.73% from the prior-year quarter, missing estimates by $157.04 million.
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 the international markets.
Todd J. Kantor’s Encompass Capital Advisors is one of the leading stakeholders of the company, with 568,581 shares worth $14.79 million. Overall, 15 hedge funds in the third quarter were bullish on CONSOL Energy Inc. (NYSE:CEIX), up from 13 funds in the prior quarter.
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 need much higher prices still 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.”
1. Green Brick Partners, Inc. (NASDAQ:GRBK)
Greenlight Capital’s Stake Value: $357,431,000
Percentage of Greenlight Capital’s 13F Portfolio: 23.96%
Number of Hedge Fund Holders: 16
Market Capitalization as of December 4: $1.394 billion
In addition to being a top small-cap stock in Greenlight Capital’s portfolio, Green Brick Partners, Inc. (NASDAQ:GRBK) is also the largest holding of the hedge fund from the third quarter. David Einhorn holds 17.4 million shares in Green Brick Partners, Inc. (NASDAQ:GRBK), worth $357.4 million, accounting for 23.96% of his total Q3 investments.
Green Brick Partners, Inc. (NASDAQ:GRBK), a Texas-based homebuilding and land development company, posted its Q3 earnings on November 2. EPS for the quarter came in at $0.95, missing estimates by -$0.10. The revenue amounted to $342.34 million, up 24.12% year-over-year, but missing estimates by $26.02 million.
Maintaining a constructive stance of the homebuilding sector 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.
Springbok Capital is one of the leading stakeholders of the company, with a $17.45 million stake in Green Brick Partners, Inc. (NASDAQ:GRBK) as of Q3 2021. Overall, 16 funds were long Green Brick Partners, Inc. (NASDAQ:GRBK) in the third quarter, with total stakes amounting to $392.3 million.
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 11 Best Penny Stocks To Buy According To Hedge Funds and 10 Extreme Dividend Stocks With Upside Potential.
