Top 5 Stocks Billionaire David Einhorn Just Added to His Portfolio

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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