Two investors have disclosed raising their exposure to Green Brick Partners Inc (NASDAQ:GRBK) in several filings with the Securities and Exchange Commission. David Einhorn‘s Greenlight Capital reported surging its stake to some 15.65 million shares from around 2.21 million shares held previously. Dan Loeb‘s Third Point, reported ownership of 5.34 million shares after the acquisition of 1.86 million shares at $5.00 per unit. Greenlight owns 49.9% of Green Brick Partners Inc (NASDAQ:GRBK) and Third Point holds around 17% of the company’s common stock.
Both moves come after Green Brick Partners Inc (NASDAQ:GRBK), formerly known as Biofuel Energy Corp, announced the completion of acquisition of equity interests of JBGL Builder Finance and certain subsidiaries of JBGL Capital from Greenlight’s affiliates and James R. Brickman. In relation to the acquisition, BioFuel Energy Corp changed its name to Green Brick Partners and switched to trading on the NASDAQ market under the ticker GRBK. Following the acquisition, valued at $275 million, David Einhorn was appointed as the chairman of Green Brick Partner’s board of directors and Mr. Brickman was appointed as the CEO of the company.
Greenlight obtained the shares through conversion of previously held class B stock and through exercising subscription rights to buy common shares. Third Point bought shares under the terms of a commitment agreement. Third Point agreed to provide a backstop commitment to buy unsubscribed common shares in a rights offering. Around a week ago, Third Point disclosed acquiring 2.43 million shares of BioFuel Energy Corp at $5.00 per unit, that were bought after the exercise of certain subscription rights.
Both Greenlight and Third Point have been the largest institutional shareholders of BioFuel Energy Corp. Another one was Jim Simons‘ Renaissance Technologies, which owned approximately 254,00 shares at the end of June.
Mr. Einhorn’s involvement in the fate of the newly formed Green Brick Partners Inc (NASDAQ:GRBK) might be a good sign, although today the stock is trading around 11% in red. In March, Greenlight and Mr. Brickman said that they are considering purchasing BioFuel Energy Corp. The stock gained some ground on the back of the news, previously falling for several months of the back of weak financial results, such as the lack of revenue for 2013.
In a statement on the company’s website, Mr. Einhorn was quoted as saying, “We are very pleased to help transition BioFuel Energy, the former ethanol producer, into Green Brick Partners, a successful homebuilder.”
“This deal is a win-win for everyone involved and creates an exciting platform for Green Brick’s future growth,” Mr. Einhorn added.
Greenlight is a value-oriented fund, which explains its decision to invest in BioFuel Energy Corp and help the company improve its situation, even at the price of completely restructuring its business. Mr. Einhorn said earlier that Greenlight invests often in companies that are mispriced due to some misunderstandings. The strategy has helped the fund to return on average around 19% per year since its inception.
At the beginning of October, Greenlight went activist on Civeo Corp (NYSE:CVEO), a spinoff from Oil States International, Inc. (NYSE:OIS), and upped its stake to 10.66 million shares, equal to around 10% of the company, from 6.15 million shares held previously. Mr. Einhorn stepped up after the company said that it plans to redomicile to Canada, but proposed several other measures, urging the board to replace CEO Bradley Dodson.
Last week, Mr. Einhorn participated at the Robin Hood Investors Conference in New York, where he said that renewable energy represents a very attractive investment currently and suggested two companies, TerraForm Power Inc (NASDAQ:TERP) and Sunedison Inc (NYSE:SUNE). Mr. Loeb also made a speech at the conference and pitched Amgen, Inc. (NASDAQ:AMGN) as a profitable investment. Moreover, Mr. Loeb also mentioned the company as an important investment in Third Point’s equity portfolio in a letter sent to the fund’s investors for the third quarter.
In this way, Green Brick Partners Inc (NASDAQ:GRBK) might be an attractive nano cap company, since it is backed by some of the best investors on the Street. Large investors commit a lot of resources to do the research and in this case, Greenlight has performed a lot of work to restructure Green Brick Partners and acquire nearly half of the company, which could also be a sign for the company’s potential.
Disclosure: none
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