Greenlight Capital, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. An annual return of 11.9% was recorded by the fund for the whole year 2021, compared to the 28.7% of the S&P 500 index for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Greenlight Capital, in its Q4 2021 investor letter, mentioned The ODP Corporation (NYSE: ODP) and discussed its stance on the firm. The ODP Corporation is a Boca Raton, Florida-based retail company with a $2.2 billion market capitalization. ODP delivered a 10.97% return since the beginning of the year, while its 12-month returns are down by -2.37%. The stock closed at $43.59 per share on February 2, 2022.
Here is what Greenlight Capital has to say about The ODP Corporation 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.”
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Our calculations show that The ODP Corporation (NYSE: ODP) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. ODP was in 21 hedge fund portfolios at the end of the third quarter of 2021, compared to 23 funds in the previous quarter. The ODP Corporation (NYSE: ODP) delivered a -2.22% return in the past 3 months.
In December 2021, we published an article that includes ODP in the 10 Best Stocks to Buy Now According to David Einhorn’s Greenlight Capital. You can find more than 100 investor letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
