7. The ODP Corporation (NASDAQ:ODP)
Greenlight Capital’s Equity Stake: $87.28 Million
Number of Hedge Fund Holders: 26
The ODP Corporation (NASDAQ:ODP) is a consumer cyclical investment play and one of David Einhorn’s top stocks to buy as the Federal Reserve cuts interest rates to boost liquidity levels in the economy. The company has carved a niche in providing business services, supplies, products, and digital workplace technology solutions.
While the company has seen its results impacted by the prevailing economic challenges characterized by high interest and reduced liquidity, it is actively working on various projects to achieve higher revenue growth by the end of 2024. Its primary aim is strategically shifting its growth direction within its main operations.
The ODP Corporation (NASDAQ:ODP) is pushing to transform its business model and emphasize artificial intelligence processes throughout the company to drive future expansion and enhance investment chances. One notable project is Project Core, aimed at refining the company’s focus on its core activities and improving operational efficiency.
A challenging business environment characterized by high interest rates was one of the catalysts behind the company posting a 10% decline in sales in Q2 to $1.7 billion. Adjusted net income from continuing operations of $20 million, or adjusted diluted earnings per share from continuing operations of $0.56, versus $48 million or $1.22, respectively, in the prior year period.
Performance in the quarter was below expectations, impacted by more cautious business spending and weaker consumer activity. Nevertheless, it is already looking into the future, having rolled out the Power of 1 strategy to propel expansion. This strategy aims to enhance customer satisfaction by providing an additional product or collection of products designed to assist them in achieving success.
Likewise, The ODP Corporation (NASDAQ:ODP) remains in a solid financial position with about $831 million in total available liquidity, which affirms why it continues to return value through buybacks. It repurchased 2.4 million shares in the quarter for $104 million.
According to Insider Monkey data on 912 hedge funds, 26 hedge funds held shares of The ODP Corporation (NYSE:ODP), valued at $190.80 million, as of Q2 2024. Greenlight Capital held 2.22 million company shares, 30% more than the previous quarter and valued at $87.28 million. It accounted for 4.26% of the firm’s 13F portfolio.
Here is what Greenlight Capital said about The ODP Corporation (NASDAQ:ODP) in its Q2 2024 investor letter:
“However, it wasn’t all roses. We had three material losers in the long portfolio (and an undisclosed loser in the short portfolio), and deservedly so. The ODP Corporation (NASDAQ:ODP) declined from $53.05 to $39.27. The quarterly results were disappointing with business-to-business sales declining 8% and adjusted operating profit cut in half. On the positive side, ODP finally announced that it intends to sell or exit Varis, its money-losing procurement and technology services platform, and as a result upgraded its earnings guidance. The company also replaced its Chairman who retired.”
