In this article, we discuss the 5 favorite stock picks of David Einhorn according to his 2022 portfolio. If you want to read our detailed analysis of Einhorn’s stock picks and hedge fund performance, go directly to David Einhorn Having a Banner Year in 2022: 10 Favorite Stock Picks.
5. Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW)
Greenlight Capital’s Stake Value: $73.07 million
Percentage of Greenlight Capital’s 13F Portfolio: 4.64%
Number of Hedge Fund Holders: 36
Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) provides outsourced aircraft and aviation operating services. It posted an EPS of $2.99 for the first quarter, beating estimates by $0.36. The quarterly revenue was recorded at $1.04 billion, above estimates by $16.02 million and signalling a jump of 20.42% over the same period last year.
Wolfe Research analyst Scott Group on April 5 downgraded Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) to ‘Underperform’ from ‘Peer Perform’ with a price target of $73. He named the firm among 3 others in his transport coverage where he sees the most risk for the first quarter. In January, the company announced that it ordered four new Boeing 777 freighters, in response to growing customer demand in the e-commerce and express markets.
As of the end of the first quarter, Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) stock was held by 36 hedge funds, as compared to 35 hedge funds in the preceding quarter. Hill City Capital, with a $123.9 million stake consisting of 1.43 million shares, was the most prominent shareholder of Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) at the end of the first quarter of 2022.
Here is what Einhorn’s Greenlight Capital had 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.”
