In this article, we discuss the top 10 stock picks of David Einhorn’s Greenlight Capital. If you want to see more of the billionaire’s favorite stocks, click David Einhorn’s Greenlight Capital Portfolio: Top 5 Stock Picks.
David Einhorn is a billionaire American financier and hedge fund manager. He founded Greenlight Capital in 1996 and currently serves as the president of the New York-based hedge fund. Greenlight Capital operates as a value driven hedge fund that seeks out long-short equity strategies. While Greenlight Capital’s performance declined by 1% in March, as opposed to the 5.2% rebound of the S&P 500 Index, the hedge fund has still gained 4.4% year-to-date. Despite posting a significant loss during the pandemic-plagued 2020, David Einhorn’s fund gained 11.9% in 2021.
The fourth quarter portfolio of David Einhorn’s Greenlight Capital has a top ten holdings concentration of 75.69%. The hedge fund’s investments are focused on the transports, materials, information technology, industrials, healthcare, finance, consumer discretionary, and energy sectors. Greenlight Capital purchased 12 new securities in Q4 2021 and sold out of 13 stocks.
The top buys of David Einhorn’s Greenlight Capital in the fourth quarter were Intel Corporation (NASDAQ:INTC), Global Payments Inc. (NYSE:GPN), and Tesla, Inc. (NASDAQ:TSLA). Whereas, the fund discarded its positions in Expedia Group, Inc. (NASDAQ:EXPE) and Aurora Innovation, Inc. (NASDAQ:AUR), among others.
The most notable holdings in Greenlight Capital’s Q4 portfolio were Twitter, Inc. (NYSE:TWTR), Change Healthcare Inc. (NASDAQ:CHNG), and Global Payments Inc. (NYSE:GPN), among others discussed at length ahead.
David Einhorn of Greenlight Capital
Our Methodology
We used David Einhorn’s Greenlight Capital portfolio for Q4 2021, listing the hedge fund’s top 10 holdings. We have ranked the list according to David Einhorn’s stake in each company. We have also mentioned the hedge fund sentiment and analyst ratings for each stock.
David Einhorn’s Greenlight Capital Portfolio: Top Stock Picks
10. CONSOL Energy Inc. (NYSE:CEIX)
Greenlight Capital’s Stake Value: $42,627,000
Percentage of Greenlight Capital’s 13F Portfolio: 2.43%
Number of Hedge Fund Holders: 15
CONSOL Energy Inc. (NYSE:CEIX) is a Pennsylvania-based company that exports bituminous coal to power generators, industrial end-users, and metallurgical companies. In Q4 2021, David Einhorn’s Greenlight Capital owned 1.87 million CONSOL Energy Inc. (NYSE:CEIX) shares, worth $42.6 million, representing 2.43% of the hedge fund’s total 13F holdings.
In 2021, CONSOL Energy Inc. (NYSE:CEIX)’s full-year revenue stood at $1.2 billion, compared to $891.5 million in 2020. The net income rebounded in 2021 to $34.1 million from the loss of $9.8 million in the previous year. The cash on hand increased in 2021 to approximately $150 million from $51 million in 2020.
On March 8, B. Riley analyst Lucas Pipes maintained a Buy recommendation on CONSOL Energy Inc. (NYSE:CEIX) and raised the firm’s price target on the stock to $46 from $32. The analyst believes that Europe diversifying imports away from Russia will result in higher supply issues in both the met and thermal coal seaborne markets. He thinks the challenges regarding energy security have “fundamentally recast the role coal plays as a major fuel in Europe and elsewhere”.
According to the fourth quarter database of Insider Monkey, 15 hedge funds were bullish on CONSOL Energy Inc. (NYSE:CEIX), with collective stakes exceeding $83 million. Mitch Cantor’s Mountain Lake Investment Management is the second largest stakeholder of the company after Greenlight Capital, holding 370,500 shares worth $8.4 million.
In addition to Twitter, Inc. (NYSE:TWTR), Change Healthcare Inc. (NASDAQ:CHNG), and Global Payments Inc. (NYSE:GPN), CONSOL Energy Inc. (NYSE:CEIX) is a notable stock from David Einhorn’s Greenlight Capital portfolio.
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 still need much higher prices 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.”
9. The ODP Corporation (NASDAQ:ODP)
Greenlight Capital’s Stake Value: $56,469,000
Percentage of Greenlight Capital’s 13F Portfolio: 3.23%
Number of Hedge Fund Holders: 28
The ODP Corporation (NASDAQ:ODP) was incorporated in 1986 and is headquartered in Boca Raton, Florida. The company offers office supplies, equipment, and digital technology solutions for small, medium, and enterprise businesses. The company’s transformation that includes the separation of its retail and business solutions divisions will finalize in 2022, and David Einhorn sees The ODP Corporation (NASDAQ:ODP) with a “strong” cash position and “undemanding” valuation.
Securities filings for Q4 2021 reveal that Greenlight Capital owns 1.4 million shares of The ODP Corporation (NASDAQ:ODP), worth $56.4 million, representing 3.23% of the hedge fund’s total 13F portfolio. David Einhorn’s fund increased its stake in The ODP Corporation (NASDAQ:ODP) by 26% in the December quarter.
The ODP Corporation (NASDAQ:ODP) reported its Q4 financial results on February 23, posting earnings per share of $0.71, above analysts’ estimates by $0.22. The $2.04 billion revenue outperformed market consensus by $58.75 million.
According to Insider Monkey’s Q4 data, 28 hedge funds were bullish on The ODP Corporation (NASDAQ:ODP), up from 21 funds in the last quarter. The total stakes owned in the fourth quarter were $476.5 million. Parag Vora’s HG Vora Capital Management held the leading position in the company, with 5 million shares worth $196.4 million.
Here is what Greenlight Capital has to say about The ODP Corporation (NASDAQ:ODP) in its Q4 2021 investor letter:
“ODP Corporation (ODP) is a holding company that operates retail brands including Office Depot and OfficeMax, and provides business services and products through a B2B distribution platform. ODP is undergoing a corporate transformation that we expect will conclude over the next year, resulting in the separation of its retail and business solutions divisions. ODP has a strong cash position and an undemanding valuation and is in the process of buying back 20% of its shares by the middle of 2022.
As the company is being broken up, we believe that a sum-of-the-parts analysis is appropriate. In June, Staples offered $1 billion in cash for ODP’s retail division, so we will use that. The remaining B2B business has better prospects and we believe that it deserves a higher multiple. We see $200 million of 2022 pro-forma EBITDA for this segment and by assigning a 7x multiple we arrive at $1.4 billion for this piece. Adding in $400 million of net cash and our estimate of $219 million of current value for its recently announced sale of CompuCom Systems (a technology support and services unit), brings us to just over $3 billion of total value. Using the last reported share count, this equates to about $55 per share.
Not included in our valuation is Varis. ODP has assembled a world-class team to create this nascent digital commerce SaaS and procurement business. We believe Varis is promising and offers ODP shareholders a potentially valuable option. We first acquired ODP shares in February and established a medium-sized position throughout the year at an average price per share of $43.69. ODP shares ended the year at $39.28.”
8. Capri Holdings Limited (NYSE:CPRI)
Greenlight Capital’s Stake Value: $57,315,000
Percentage of Greenlight Capital’s 13F Portfolio: 3.27%
Number of Hedge Fund Holders: 43
Capri Holdings Limited (NYSE:CPRI) is a London-based holding company that sells branded fashion wear, footwear, and accessories via its subsidiaries in the United States, Canada, Latin America, Europe, the Middle East, Africa, and Asia. Capri Holdings Limited (NYSE:CPRI)’s subsidiaries include Versace, Jimmy Choo, and Michael Kors.
Capri Holdings Limited (NYSE:CPRI) reiterated its outlook for 2022 on March 9. The company expects total revenue of approximately $5.56 billion, and diluted earnings per share of almost $6. Any future share buybacks are subject to prevailing market conditions, legal requirements, and trading restrictions as per Capri Holdings Limited (NYSE:CPRI)’s insider trading policy.
On February 2, Capri Holdings Limited (NYSE:CPRI) posted earnings for the quarter ending December 2021. The company announced an EPS of $2.22, beating analysts’ forecasts by $0.53. The Q4 revenue $1.61 billion increased 23.58% year-over-year, outperforming market consensus by $139.24 million.
Wells Fargo analyst Ike Boruchow maintained an Overweight rating on Capri Holdings Limited (NYSE:CPRI) but slashed the firm’s price target on the stock to $85 from $95 on April 5. The analyst cited a lowered 2022 outlook and took a more cautious stance on the group in the short-term.
According to the hedge funds tracked by Insider Monkey, 43 funds placed long calls on Capri Holdings Limited (NYSE:CPRI) at the end of the fourth quarter of 2021, compared to 46 funds in the earlier quarter. Richard Mashaal’s Rima Senvest Management is the biggest stakeholder of the company, with 5.3 million shares worth $345.4 million.
Here is what Alger Small Cap Focus Fund has to say about Capri Holdings Limited (NASDAQ:CPRI) in its Q4 2021 investor letter:
“Capri Holdings is a global fashion luxury group consisting of three brands: Michael Kors, accounting for 72% of fiscal year 2021 sales, Jimmy Choo, accounting for 10% of sales, and Versace, accounting for 18% of sales. The brands cover various fashion categories, including women’s and men’s accessories, footwear, ready-to-wear, wearable technology, watches, jewelry, eyewear and fragrance products. Capri mainly operates within the $70 billion accessories segment of the global luxury market, which is growing 5% to 6% annually. Capri shares outperformed in the last three months of 2021 after the company reported strong results for the fiscal quarter ended September 25. Revenue, margins and earnings per share all beat management’s internal expectations, and the company raised its fiscal year 2022 outlook for all three brands, despite supply chain pressure. Capri also approved a new two-year share repurchase program of up to $1 billion, replacing its existing $500 million program, which had $250 million of availability remaining.”
7. The Chemours Company (NYSE:CC)
Greenlight Capital’s Stake Value: $58,456,000
Percentage of Greenlight Capital’s 13F Portfolio: 3.34%
Number of Hedge Fund Holders: 35
The Chemours Company (NYSE:CC) is an American chemical company that is based in Wilmington, Delaware. The company operates via four segments – Titanium Technologies, Thermal & Specialized Solutions, Advanced Performance Materials, and Chemical Solutions.
As of Q4 2021, David Einhorn’s Greenlight Capital owns 1.74 million shares of The Chemours Company (NYSE:CC), worth $58.4 million, representing 3.34% of the hedge fund’s total 13F securities. David Einhorn first purchased shares of The Chemours Company (NYSE:CC) in Q4 2015, and has been mostly consistent with his stake over the years.
The Chemours Company (NYSE:CC)’s revenue for 2021 came in at $6.3 billion, up from $4.9 billion in the prior year. The 2021 net income also increased to $608 million from $219 million in 2020. The company’s cash holdings in 2021 grew 31.3% year-over-year to $1.45 billion.
On February 9, The Chemours Company (NYSE:CC) announced a dividend per share of $0.25, which was paid to shareholders on March 25. The company pays dividends quarterly and offers a yield of 3.08% as of April 12.
RBC Capital analyst Arun Viswanathan lowered the price target on The Chemours Company (NYSE:CC) to $41 from $44 but kept an Outperform rating on the shares on February 15. The analyst cited the ongoing increase in input costs for titanium dioxide and softer auto OEM builds. However, he believes that cost headwinds are likely to moderate in the second half of 2022 and further improve in 2023.
Of the 924 hedge funds tracked by Insider Monkey in Q4 2021, 35 funds were bullish on The Chemours Company (NYSE:CC), with combined stakes valued at $566.6 million. John Petry’s Sessa Capital held the biggest position in the company, with more than 8 million shares worth roughly $275 million.
Just like Twitter, Inc. (NYSE:TWTR), Change Healthcare Inc. (NASDAQ:CHNG), and Global Payments Inc. (NYSE:GPN), elite investors are piling into The Chemours Company (NYSE:CC).
Here is what Miller Value Partners has to say about The Chemours Company (NYSE:CC) in its Q3 2021 investor letter:
“The Chemours Co (CC) dropped 15.9% over the period. The company reported Q2 revenue of $1.7Bn, topping consensus of $1.54Bn and rising +51% Y/Y driven by +46% volume growth while price and foreign exchange (FX) added +6%. EBITDA of $366M beat by 11% on increased volumes while FCF of $189M (+278% Y/Y) drove $13M of stock buybacks and $20M of debt paydown. Management expects FY21 EBITDA and earnings per share (EPS) to come in at the high-end of prior guidance, or $1.25Bn and $3.56, respectively with FCF exceeding $450M. Additionally, Chemours announced a settlement with the State of Delaware regarding all chemical cleanup and environmental remediation for the state.”
6. Global Payments Inc. (NYSE:GPN)
Greenlight Capital’s Stake Value: $68,401,000
Percentage of Greenlight Capital’s 13F Portfolio: 3.91%
Number of Hedge Fund Holders: 67
Global Payments Inc. (NYSE:GPN) is a Georgia-based payment technology company that operates through three segments – Merchant Solutions, Issuer Solutions, and Business and Consumer Solutions. The company offers payment processing services via credit and debit cards, as well as contactless payments.
David Einhorn’s Greenlight Capital purchased 506,000 Global Payments Inc. (NYSE:GPN) shares in the fourth quarter of 2021, worth $68.4 million, representing 3.91% of his total 13F holdings. The stock is a new addition to the billionaire’s Q4 portfolio.
On February 10, Global Payments Inc. (NYSE:GPN) declared a $0.25 per share quarterly dividend, in line with previous. The dividend was paid on March 25, to shareholders of the company as of March 11. Global Payments Inc. (NYSE:GPN) also approved an extension to the company’s share repurchase program, and now the authorized capital for buybacks is $2 billion.
Wells Fargo analyst Jeff Cantwell initiated coverage of Global Payments Inc. (NYSE:GPN) with an Overweight rating and a $194 price target on April 4. The analyst is bullish on the payments and fintech sector. He sees a $1.5 trillion annual revenue opportunity for fintech companies globally, and forecasts 6% annual growth over the next 10 years. According to the analyst, Global Payments Inc. (NYSE:GPN)’s valuation should reflect the strong earnings growth in 2022 and 2023.
According to the fourth quarter database of Insider Monkey, 67 hedge funds held long positions in Global Payments Inc. (NYSE:GPN), with collective stakes amounting to $3.3 billion. William B. Gray’s Orbis Investment Management is the largest stakeholder of the company, with 4.8 million shares worth $657.3 million.
Here is what Artisan Mid Cap Fund has to say about Global Payments Inc. (NYSE:GPN) in its Q4 2021 investor letter:
“Global Payments was another notable drag on Q4 performance. We wouldn’t say the company’s profit cycle has faltered of late—they appear likely to deliver 14%-15% top-line and 27%-28% profit growth this year (vs. -5% and 4% in 2020). Investors may have expected even more growth in early 2021, but stubborn pandemic pressures remain in certain geographies and categories of consumer spending. However, we think most of the stock’s decline has been due to fears about emerging competitive pressures from new payments technology upstarts (discussed in prior letters). Given our belief the company can continue to sustain solid growth in the coming years despite competitive entrants—management is projecting 17%-20% EPS growth in 2022—we view the stock’s deeply discounted multiple as attractive, and we have maintained our position.”
Click to continue reading and see David Einhorn’s Greenlight Capital Portfolio: Top 5 Stock Picks.
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Disclosure: None. David Einhorn’s Greenlight Capital Portfolio: Top 10 Stock Picks is originally published on Insider Monkey.
