David Einhorn Having a Banner Year in 2022: 5 Favorite Stock Picks

1. Green Brick Partners, Inc. (NASDAQ:GRBK)

Greenlight Capital’s Stake Value: $336.74 million

Percentage of Greenlight Capital’s 13F Portfolio: 21.39%

Number of Hedge Fund Holders: 13

Green Brick Partners, Inc. (NASDAQ:GRBK) was the largest holding of David Einhorn’s Q1 2022 portfolio, with a $336.7 million stake. The company offers homebuilding services in the United States.

B. Riley analyst Alex Rygiel on April 6 gave Green Brick Partners, Inc. (NASDAQ:GRBK)  a ‘Buy’ rating, and lowered the firm’s price target to $25 from $27. The analyst attributed the drop in price target to near-term weakness in deliveries causes by supply chain issues.

In the first quarter, Green Brick Partners, Inc. (NASDAQ:GRBK) recorded a revenue of $393.6 million, beating market estimates by $51.9 million and representing year-on-year growth of 67.87%. EPS stood at $1.20, outperforming estimates by $0.35.

Of the 900+ hedge funds tracked by Insider Monkey, 13 held positions in Green Brick Partners, Inc. (NASDAQ:GRBK) with a combined value of $376.3 million. This shows a positive trend over the previous quarter where $587.7 million worth of stakes were held by 12 hedge funds.

David Einhorn’s Greenlight Capital talked about Green Brick Partners, Inc. (NYSE:GRBK) and the housing sector in detail in its Q1 2022 investor letter. The fund said:

“For the quarter, our long portfolio lost 7%, which was almost completely offset by gains on our shorts and index hedges. Macro, led by inflation swaps and gold, generated slightly more than all the return. The long portfolio attribution bifurcated into Green Brick Partners (GRBK), which fell sharply and was responsible for much more than all the loss, and pretty much everything else, which did quite well..

..Despite the fact that there was nothing wrong with GRBK’s corporate performance, the shares fell from $30.33 to $19.76 during the quarter. Analysts reduced 2022 and 2023 EPS expectations by about 2%, leaving the shares at 4.7x and 4.3x those estimates. The problem was with the sector, as most homebuilders fell by similar percentages.

Homebuilding stocks de-rated as a consensus formed around a pending collapse in housing. The narrative is that house prices have risen, interest rates (and therefore mortgage rates) are rising, sales and housing starts are slowing, inventories are building, and cancellations are rising. Supposedly, this implies that house prices are about to collapse, leaving homebuilders in a precarious position. Everyone remembers what happened when the last housing bubble popped. The market appears to be saying that it is about to happen again and that the sector is now un-investable at pretty much any valuation… ” (Click here to see the full text)

You can also take a look at 10 Best Dividend Stocks for Passive Income and 10 Best Value Stocks To Buy Now.

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