Billionaire David Einhorn’s Top Dividend Stocks

Having generated annualized returns of 19.5% since its inception in 1996 till 2013, David Einhorn‘s Greenlight Capital was considered one of the best long/short equity hedge fund on the Street. However, that was three years ago. The fund managed to end 2014 with a net gain of 8.7%, but was down a whopping 20.2% in 2015. This staggering loss not only drove down the fund’s net annualized return to 16.5% since its inception, but also put a major dent to its reputation.

To recover from such a massive drawdown, the fund has made some notable changes in its portfolio this year, which includes betting on stocks with respectable annual dividend yields. Taking that into account, this post, we will take a look at five major holdings of Greenlight Capital that sport a high dividend yield currently and will discuss how those stocks have performed lately.

We track hedge funds and prominent investors because our research has shown that historically their stock picks delivered superior risk-adjusted returns. This is especially true in the small-cap space. The 15 most popular small-cap stocks delivered a monthly alpha of 80 basis points in our backtests that covered the period between 1999 and 2012 (see the details here).

#5 Lamar Advertising Co (NASDAQ:LAMR)

– Shares Owned by Greenlight Capital (as of June 30): 148,072

– Value of Holding (as of June 30): $9.82 million

– Annual Dividend / Yield : $3.24/5.03%

Greenlight Capital initiated a stake in Lamar Advertising Co (NASDAQ:LAMR) during the first quarter and kept it unchanged during the second quarter. Despite the company reporting better-than-expected numbers for its second quarter last month, Lamar Advertising Co (NASDAQ:LAMR)’s stock took a beating after the earnings release. That slump along with the decline the stock has since then has eroded the gains that it had registered earlier in the year and it now trades nearly flat for 2016. While analysts had expected Lamar Advertising Co to report EPS of $0.83 on revenue of $384.09 for the second quarter, the company declared EPS of $0.84 on revenue of $387.50 million. On September 12, analysts at Loop Capital initiated their coverage on the stock with a ‘Buy’ rating. The popularity of the company among funds covered by us saw an increase during the second quarter with its ownership among them rising by three to 21 and the aggregate value of their holdings in it increasing by $7 million to $249.42 million.

#4 CNX Coal Resources LP (NYSE:CNXC)

– Shares Owned by Greenlight Capital (as of June 30): 5.48 Million

– Value of Holding (as of June 30): $50.82 million

– Annual Dividend / Yield : $2.04/15.41%

CNX Coal Resources LP (NYSE:CNXC) was another stock in which Greenlight Capital didn’t make any changes to its stake during the second quarter. Shares of the thermal coal producer have appreciated by over 50%, so far this year, however, the stock still sports a lucrative dividend yield of over 15%. The stock is currently trading at a price-to-book multiple of 1.9, which is more than the double the average price-to book multiple of 0.9 at which its peers are currently trading. For its fiscal 2016 third quarter, analysts are expecting the company to report EPS of $0.29 on revenue of $59.28 million. For the same quarter last year, CNX Coal Resources LP had posted EPS of $0.62 on revenue of $65.15 million. At the end of second quarter, there were six funds in our database that had long positions in the stock with the aggregate value of their holdings accounting for 27.30% of the company’s float.

#3 DSW Inc. (NYSE:DSW)

– Shares Owned by Greenlight Capital (as of June 30): 4.25 Million

– Value of Holding (as of June 30): $90 million

– Annual Dividend / Yield : $0.80/3.38%

Moving on, Greenlight Capital upped its stake in DSW Inc. (NYSE:DSW) by 22% during the second quarter. Other funds that increased their stake in the company during that period included Zeke Ashton‘s Centaur Capital Partners and David Brown‘s Hawk Ridge Management. The footwear retailer has lost almost 50% of its market capitalization since November 2013, but analysts who track the stock feel that, trading at a trailing P/E of 19, it is still expensive at these levels. On August 30, the company reported its second-quarter results, declaring EPS of $0.35 on revenue of $659 million, versus analysts’ expectation of EPS of $0.30 on revenue of $658.95 million. Earlier this month, analysts at Canaccord Genuity reiterated their ‘Hold’ rating and $23 price target on the stock, which represents a  potential downside of 2% from its current trading price. The number of hedge funds covered by us that were long DSW Inc. (NYSE:DSW) declined by six to 16 during the second quarter and the aggregate value of their holdings in it also came down by 24.4% to $223.5 million during that period.

#2 Avangrid Inc (NYSE:AGR)

– Shares Owned by Greenlight Capital (as of June 30): 3.32 Million

– Value of Holding (as of June 30): $153.06 million

– Annual Dividend / Yield : $1.72/4.18%

Avangrid Inc (NYSE:AGR) is the only stock covered in this article in which Greenlight Capital reduced its stake during the second quarter, by 6%. Other hedge funds also became less bullish on the company during that period with its ownership among funds tracked by us coming down by five to 14 and the aggregate value of their positions falling by $53.9 million. Avangrid Inc (NYSE:AGR) came into existence last year in December after Iberdrola USA and UIL Holdings Corporation completed their merger. Since then, shares of the diversified energy and utility company have appreciated by over 14%. For its most recent quarter, Avangrid reported EPS of $0.32, missing analysts’ estimate by $0.11, and revenue of $1.44 billion. On September 8, analysts at Guggenheim initiated their coverage on the stock with a ‘Neutral’ rating.

#1 General Motors Company (NYSE:GM)

– Shares Owned by Greenlight Capital (as of June 30): 17.21 Million

– Value of Holding (as of June 30): $487.1 million

– Annual Dividend / Yield : $1.52/4.91%

Though Greenlight Capital increased its stake in General Motors Company (NYSE:GM) by 13% during the second quarter, the auto company still remained the fund’s second largest equity holding at the end of that period. General Motors Company (NYSE:GM)’s stock has fallen almost 10% this year, which has helped in increasing its annual dividend yield to hover around the 5% mark. At the end of last week, shares of Detroit-based auto giant took a big beating after it revealed that it will be recalling 4.3 million vehicles manufactured between 2014 and 2017 due to a bug in the system that controls their airbags. Though that news was depressing for shareholders, the numbers that the company released for its first long-range electric car, Bolt, on September 13 might have given them some respite. According to tests conducted by General Motors Company, the new Bolt can cover a distance of 238 miles in a single charge, which is higher than the 215 miles that Tesla’s Model 3 promises. Moreover, the new Bolt is expected to be hit the market by the end of this year, whereas the Model 3 won’t be available until late-2017. The ownership of General Motors Company among funds covered by us inched down by two to 65 during the second quarter while the aggregate value of their holdings in it fell by $420 million.

Disclosure: None