In this article we present the list of top 10 stocks billionaire David Einhorn just added to his portfolio.
Global Payments Inc. (NYSE:GPN), Intel Corporation (NASDAQ:INTC), and Discovery, Inc. (NASDAQ:DISCA) are among the major new additions to the 13F portfolio of billionaire activist investor David Einhorn during the fourth quarter of 2021.
David Einhorn founded Greenlight Capital in 1996 when he was just 27 years old and quickly became one of the darlings of the hedge fund world. Over the following 18 years, Einhorn’s activist fund would post annualized returns of nearly 20%, making it one of the most successful in the world.
Einhorn has hit a very rough patch in recent years however, a stretch which has been characterized by his failed short bets against growth titans like Tesla, Inc. (NASDAQ:TSLA) and Netflix, Inc. (NASDAQ:NFLX), which he incorrectly (thus far at least) perceived as giant bubbles just waiting to be burst.
Greenlight lost 34% between 2015 and late-2020, which sent investors fleeing. As of September 2021, Greenlight had just $1.1 billion in assets under management, down from over $12 billion in 2015. On the positive side, Greenlight is coming off one of its best quarters in several years, returning 18.6% in Q4 to push its 2021 returns to 11.9%.
Greenlight added 12 new positions to its 13F portfolio during Q4, while selling off 13 former holdings. Given the fund’s strong performance during the quarter, it’s not surprising the value of its 13F portfolio jumped to $1.75 billion, up from $1.49 billion a quarter earlier. Greenlight remained most heavily invested in the materials sector, which has been its top sector of choice for two years running.
The stocks added to Greenlight’s portfolio during Q4 are compelling in that Einhorn likely views them as recession-proof. In the fund’s fourth quarter investor letter, a copy of which can be downloaded here, Einhorn makes the case that ongoing inflation will eventually lead to a recession, and that he’s begun to position his fund for just such a scenario.
Our Methodology
We took a look at the latest 13F filing from Greenlight Capital to uncover the fund’s newest holdings. They have been ranked in order of the value of Greenlight’s new position, from least to most. We follow hedge funds like Greenlight Capital because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.
All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q4 2021 reporting period. With that in mind, let’s take a look at the top 10 stocks David Einhorn was buying in Q4.
Top 10 Stocks Billionaire David Einhorn Just Added to His Portfolio
10. Proterra Inc. (NASDAQ:PTRA)
Value of Greenlight Capital‘s 13F Position: $133,000
Number of Hedge Fund Shareholders: 14
Einhorn, who’s been a notable Tesla bear for several years, recently found an electric vehicle maker that’s more to his liking, Proterra Inc. (NASDAQ:PTRA). Greenlight Capital bought 15,070 PTRA shares during Q4, taking a small stake in the company.
Numerous other hedge funds decided to bail on Proterra Inc. (NASDAQ:PTRA) during Q4, with the stock mired in a 59% slide over the last year. 39% of Proterra’s former hedge fund shareholders sold off their holdings in the company during the quarter.
Proterra Inc. (NASDAQ:PTRA) appears poised to benefit from the latest infrastructure bill, which has earmarked $5 billion towards buying low- or zero-emission buses. Proterra is one of the industry leaders in the EV bus space, delivering 208 electric buses in 2021 which helped the firm pull in $243 million in revenue. While there’s potentially a big opportunity ahead of it, the company’s currently modest growth rates don’t appear to be exciting investors all that much. Proterra grew revenue by just 23% year-over-year in 2021, though new bus orders grew by 45%.
Global Payments Inc. (NYSE:GPN), Intel Corporation (NASDAQ:INTC), and Discovery, Inc. (NASDAQ:DISCA) may be the biggest names added to Einhorn’s portfolio in Q4, but Proterra is certainly one to watch for in the coming years.
9. 23andMe Holding Co. (NASDAQ:ME)
Value of Greenlight Capital‘s 13F Position: $653,000
Number of Hedge Fund Shareholders: 13
Einhorn also took a stake in 23andMe Holding Co. (NASDAQ:ME) during Q4, another stock that’s experienced a hedge fund flight in recent quarters. Greenlight was one of just 13 hedge funds long ME on December 31, half the amount that were long the genetic testing company on June 30.
23andMe Holding Co. (NASDAQ:ME) rode the early wave of interest in genetic testing and ancestry checking to impressive results and a hefty valuation, but the shine has begun to wear off the company as growth in the space has faltered and as it continues to lose money.
23andMe Holding Co. (NASDAQ:ME) does have some intriguing prospects in the drug development space however. With its genetic database of more than 12 million people, nearly 10 million of which have opted into allowing the company to use their genomic information for drug research and commercialization opportunities, 23andMe could soon transition into more of a biotech company than a diagnostics one.
8. Cassava Sciences, Inc. (NASDAQ:SAVA)
Value of Greenlight Capital‘s 13F Position: $1.78 million
Number of Hedge Fund Shareholders: 7
Greenlight Capital was one of just seven hedge funds long Cassava Sciences, Inc. (NASDAQ:SAVA) on December 31, building a new stake of 40,620 shares during Q4. Hedge fund ownership of SAVA has dropped by 46% over the past two quarters.
One of the 5 most shorted stocks right now, Cassava Sciences, Inc. (NASDAQ:SAVA) shares have been obliterated since the middle of 2021, losing 58% of their value. The biotech company has certainly provided a lot of fodder for short sellers, which had over 37% of the company’s shares shorted as of the middle of February.
Cassava Sciences, Inc. (NASDAQ:SAVA) has been accused of manipulating the trial data for its study of Alzheimer’s drug Simufilam, though it should also be noted that the petition was launched by a group representing said short sellers. That doesn’t mean they’re necessarily wrong, but there is additional financial motivation behind the petition.
Cassava currently has two ongoing Phase 3 studies for Simufilam following the drug’s impressive Phase 2 results, which included improvements to some biomarkers that have never been achieved before by any Alzheimer’s drug.
7. Civitas Resources, Inc. (NYSE:CIVI)
Value of Greenlight Capital‘s 13F Position: $5.79 million
Number of Hedge Fund Shareholders: 26
Greenlight Capital bought 118,218 shares of Civitas Resources, Inc. (NYSE:CIVI) during Q4, building a stake that was valued at just under $5.8 million as of December 31. There was a 30% jump in hedge fund ownership of CIVI during the quarter.
Civitas Resources, Inc. (NYSE:CIVI) pulled in $163.7 million in net income during Q4, which accounted for the vast majority of its 2021 net income of $178.92 million. While the Colorado-based oil-and-gas producer grew its net income by over $75 million year-over-year, that net income nonetheless represented a slight decline on a per basic common share basis, falling to $4.82 from $4.98.
Civitas Resources, Inc. (NYSE:CIVI) grew its daily average sales volume on a crude oil equivalent to 116,229 barrels during the fourth quarter, a 364% year-over-year surge. The company also continued to improve its product mix away from crude oil and towards natural gas, with natural gas and NGLs each rising by six percentage points to 32% and 26% of product mix respectively during Q4, while crude oil fell by 12 percentage points to 42%.
6. Talis Biomedical Corporation (NASDAQ:TLIS)
Value of Greenlight Capital‘s 13F Position: $6.29 million
Number of Hedge Fund Shareholders: 7
Talis Biomedical Corp (NASDAQ:TLIS) is another biotech company that was added to the 13F portfolio of David Einhorn during Q4. Two Sigma Advisors and Tudor Investment Corp also built new stakes in TLIS during the quarter, raising the number of hedge fund shareholders to seven from just four.
Talis Biomedical Corp (NASDAQ:TLIS) is in the process of developing several different assays, or substance analysis tests, that will be capable of uncovering the specific composition details of everything from Covid-19 variants to chlamydia and gonorrhea bacteria. While the company is confident in its the quality of its assays, it’s faced various challenges on the manufacturing side which have delayed its ability to commercialize its assays.
Talis Biomedical Corp (NASDAQ:TLIS) recently shed 25% of its workforce and instituted other cost reduction initiatives to preserve its cash runway through 2024 as it continues to work through and scale up its manufacturing processes.
In the following half of the list, we’ll take a look at David Einhorn’s Q4 purchases of Global Payments Inc. (NYSE:GPN), Intel Corporation (NASDAQ:INTC), and Discovery, Inc. (NASDAQ:DISCA).
5. Galapagos NV (NASDAQ:GLPG)
Value of Greenlight Capital’s 13F Position: $10.2 million
Number of Hedge Fund Shareholders: 27
Hedge funds are finding Galapagos NV (NASDAQ:GLPG) increasingly intriguing as ownership of GLPG among top money managers more than doubled in 2021 even as the shares lost 47% of their value. David Einhorn was one of those money managers trying to buy low on GLPG in Q4, as he bought 185,000 shares of the stock.
Galapagos NV (NASDAQ:GLPG) shares have performed better so far in 2022, gaining nearly 14%. Those gains primarily came in late January, when the company announced that former Johnson & Johnson (NYSE:JNJ) chief scientific officer Paul Stoffels would take over as Galapagos’ CEO beginning on April 1.
Galapagos NV (NASDAQ:GLPG) shares have been done in over the past two years due in part to two of the most advanced and promising drugs in its pipeline failing to receive FDA approval. The first was oral rheumatoid arthritis drug Filgotinib, which was anticipated to reach $4 billion in annual sales at its peak. The drug has been approved in the EU and Japan. Next up was idiopathic pulmonary fibrosis treatment ziritaxestat, which while effective, was deemed to have an unfavorable safety-to-benefit ratio.
4. Discovery, Inc. (NASDAQ:DISCA)
Value of Greenlight Capital‘s 13F Position: $15.35 million
Number of Hedge Fund Shareholders: 73
Greenlight Capital built a stake of 652,000 shares of Discovery, Inc. (NASDAQ:DISCA) during Q4, joining other prominent hedge funds like AQR Capital and Omega Advisors as new shareholders of DISCA. Nonetheless, there’s a 21% drop in hedge fund ownership of the stock over the past three quarters.
Discovery, Inc. (NASDAQ:DISCA) is set to merge with AT&T Inc. (NYSE:T)’s WarnerMedia division in a move that’s been approved by regulators. The tie-up will group several popular and powerful brands under one streaming umbrella called HBO Max. Included will be television channels like The Food Network and Animal Planet, as well as the bulk of Warner’s catalog of hit movies and HBO’s stable of award-winning shows. As of last May, the combined entity was anticipated to pull in $53 billion in sales in 2023.
Longleaf Partners Fund talked about Discovery, Inc. (NASDAQ:DISCA) in its Q4 2021 investor letter, noting that the stock has been unfairly grouped with other dying legacy media stocks by investors:
“While our largest holdings received at least a little market appreciation, our detractors were unreasonably punished based on headline-level misunderstandings. Discovery Communications is grouped with dying legacy media stocks, and many market participants are sitting this one out until the plan for the merged Warner Bros. Discovery is obvious. We believe Discovery is obvious. We view this as an opportunity and would also note that Discovery’s sharp stock price rally to begin 2022 indicates that at least some of the late year selling pressure might have been tax loss-selling or just plain capitulation.”
3. Intel Corporation (NASDAQ:INTC)
Value of Greenlight Capital‘s 13F Position: $15.94 million
Number of Hedge Fund Shareholders: 75
Hedge funds have grown quite a bit more bullish on Intel Corporation (NASDAQ:INTC) since the middle of 2019, as ownership of the stock has risen by 47% among their ranks. Einhorn’s activist fund is among the newest funds to take a stake in the chipmaker, buying 309,500 shares during Q4.
Intel Corporation (NASDAQ:INTC) has laid out bold plans to not only transform itself into a cutting edge chipmaker, but to also transform Europe into a leading producer of semiconductors. The company is investing tens of billions of dollars towards those goals, building new plants in Ohio, as well as investing billions in Germany, France, and Ireland to bolster every aspect of its chip design, manufacturing, R&D, and packaging.
Third Point Management praised the progress Intel Corporation (NASDAQ:INTC) has made towards its turnaround efforts in the fund’s Q4 2021 investor letter, though the fund also unloaded its Intel stake during the quarter. Here is what the fund had to say:
“2021 was a highly productive year for Intel‘s new CEO, Pat Gelsinger. Despite the stock’s tepid results, we see a compelling, underappreciated fundamental story. Intel’s “brain drain” – a key part of our thesis when we first sought to help the company confront its long-time underperformance – appears to be reversing. Since joining Intel, Mr. Gelsinger has not only brought back prominent Intel former employees but has also attracted talents from competitors such as AMD, Nvidia, Apple, and, most recently, Micron’s stellar Chief Financial Officer, David Zinsner.
We are encouraged by Intel’s aggressive investment plan, including a recently announced fabrication plant in Ohio and acquisition of Tower Semiconductors. We knew from the start that Intel’s turnaround would be complex and lengthy, and we have been pleased to see Mr. Gelsinger sacrifice near-term earnings for long-term growth.
Finally, after a series of blunders across its PC and Server product lines, Intel is finally receiving good reviews for one of its upcoming processors: Alder Lake. Tom’s Hardware, a preeminent hardware publication, called Alder Lake “a cataclysmic shift in Intel’s battle against AMD’s potent Ryzen 5000 chips.” While this is just one product across a broad lineup, and given it will take time to achieve leadership across them all, we are encouraged by these tangible signs of progress under Mr. Gelsinger’s leadership. With talent returning, an improving product suite, and a willingness to invest for growth, we believe Intel’s prospects have turned the corner. We expect that the company’s upcoming analyst day will be an ideal time for Mr. Gelsinger to articulate the progress he has made and begin to reset expectations for the company.”
2. Kyndryl Holdings, Inc. (NYSE:KD)
Value of Greenlight Capital‘s 13F Position: $16.7 million
Number of Hedge Fund Shareholders: 27
27 hedge funds were long Kyndryl Holdings Inc (NYSE:KD) on December 31, including David Einhorn’s Greenlight Capital, which owned 922,400 shares. KD shares have lost 31% of their value so far in 2022.
Kyndryl Holdings Inc (NYSE:KD) went public in the fourth quarter after being spun off from International Business Machines Corporation (NYSE:IBM). IBM shareholders received tax-free KD shares from the spinoff, though nearly half of IBM’s shareholders in our database didn’t bother holding on to their new KD positions. Interestingly, Greenlight Capital went out of its way to buy into KD, as it was not an IBM shareholder at the time of the spinoff.
That’s somewhat surprising given that Kyndryl Holdings Inc (NYSE:KD) appears to have limited growth prospects and has been unmercifully trounced by the market since making its debut. The provider of enterprise IT infrastructure services may actually see revenue decline through 2024 according to Evercore ISI analyst David Togut, after which it may be poised for modest single digit organic growth beginning in 2025.
1. Global Payments Inc. (NYSE:GPN)
Value of Greenlight Capital‘s 13F Position: $68.4 million
Number of Hedge Fund Shareholders: 68
Topping the list of David Einhorn’s biggest new portfolio additions of Q4 is Global Payments Inc. (NYSE:GPN), 506,000 shares of which were snapped by Greenlight Capital during the quarter. Hedge fund ownership of GPN is up by more than 50% since the middle of 2019.
Global Payments Inc. (NYSE:GPN) grew its GAAP revenue by 14.8% to $8.52 billion in 2021, while expanding its operating margin by 3.9 percentage points to 15.9%. Combined, those factors helped drive adjusted earnings per share 27.5% higher year-over-year, to $8.16. With a stable balance sheet and strong free cash flow generation, the company expects to return even more money to shareholders in the coming years.
David Einhorn discussed his new position in Global Payments Inc. (NYSE:GPN) in Greenlight Capital’s Q4 2021 investor letter, stating that the market has likely overestimated the potential threat to GPN from fintech disruptors, which sent its shares crashing last year and allowed the fund to purchase its stake at an attractive price. Here’s what Greenlight Capital had to say about Global Payments:
“We established a new large long position in Global Payments (GPN). GPN offers payment technology and software solutions to enable small and midsize merchants to accept electronic payments in various forms, both at physical locations and online. GPN also offers ancillary services such as payroll, time & attendance, inventory management, and industry vertical specific software (e.g. for restaurants or dentists).
GPN benefits from ongoing consumer preference shifts to electronic payments, which drove double-digit annual top line growth from 2012 through 2019. GPN benefits from inflation since it generally charges a percentage of merchant dollar volume. It earns 40% sustainable operating margins from taking small fees on billions of transactions from a diversified customer base. We rarely find such a high-quality business at a valuation that we find attractive. GPN regularly traded well above a market multiple through early 2021.
However, the stock dropped 46% between April and December as investors became worried about fintech disruption. We think the market is overstating the threat, and believe that it is more likely that a disrupter will buy GPN for its scale, salesforce and relationships, than it is to outcompete GPN. We acquired our position at an average price of $126.67 or 13x consensus expected 2022 EPS. GPN ended the year at $135.18 per share.”
For a look at some other interesting stocks that could make good additions to your own portfolio, check out 10 Best Dividend Stocks for College Students and 10 Best Biotech Stocks Under $5.
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Disclosure: None. Top 10 Stocks Billionaire David Einhorn Just Added to His Portfolio is originally published at Insider Monkey.
