In this article, we will look at 10 stocks to buy now according to David Einhorn’s Greenlight Capital. If you want to skip reading about David Einhorn’s investment strategy and his hedge fund’s performance, you can go directly to 5 Stocks to Buy Now According to David Einhorn’s Greenlight Capital.
David Einhorn is the founder and hedge fund manager of Greenlight Capital, a long-short value-oriented hedge fund incorporated in 1996. David Einhorn went to Cornell University, from where he graduated with the highest honors in 1991. In May of 1996, Mr. Einhorn borrowed money from his parents and founded his hedge fund with $0.9 million in start-up capital. According to Forbes, Greenlight Capital has averaged a 15.4% net return from May 1996 through Q1 2018. Mr. Einhorn is among the most prominent investors covered in financial news and media and has been an active speaker at the Sohn Investment Conference.
David Einhorn has been famed for his attempts to challenge management at major corporations, and some of his attempts to accelerate shareholder returns were a success. In 2011, David Einhorn called on Steve Ballmer to resign from his position as the CEO of Microsoft Corporation (NASDAQ:MSFT) after the company was superseded by Apple Inc. (NASDAQ:AAPL) in market value. Mr. Einhorn initiated a position in Microsoft Corporation (NASDAQ:MSFT) in Q4 2010. He maintained his position in Microsoft Corporation (NASDAQ:MSFT) up until the first quarter of 2013, after which he exited the company in Q2 2013.
In February of 2013, David Einhorn sued Apple Inc. (NASDAQ:AAPL) for not paying dividends to shareholders as the company had free cash flow which it could use for driving shareholder value. Later in February, David Einhorn won the lawsuit against Apple Inc. (NASDAQ:AAPL). David Einhorn has, on numerous occasions in the past, bet against Tesla, Inc. (NASDAQ:TSLA). He recently placed another short bet on Tesla, Inc. (NASDAQ:TSLA) in Q1 2022, after his hedge fund purchased Put options against 100,000 Tesla, Inc. (NASDAQ:TSLA) shares.
An Investment Idea From David Einhorn: 2022 Sohn Conference
David Einhorn recently presented at the 2022 Sohn Conference where he shared his insights about inflation, its causes and effects, and how to invest in a rising rate environment. Mr. Einhorn first discussed his view on the current inflation situation and said:
“The Congressional Budget Office projects a 2022 deficit of over a trillion dollars. Demographics will cause this to more than double in a decade, and these projections don’t assume a recession, rapidly rising inflation index benefits such as social security, or high-interest rates on the national debt. As everyone knows we have an inflation problem… It isn’t entirely the fault of fiscal and monetary policies however those policies are inflationary and in a facilitated environment where inflation could take off. The ESG movement has thwarted investment in traditional sources of energy combined with investor eagerness to throw nearly all growth capital at software as eating world companies have driven up the cost of equity for companies that ensure that the world can in fact eat. The current energy crisis isn’t causing any change. Rather than stimulate supply, the U.S. is threatening windfall profit taxes on producers, and the G7 countries in Japan just pledged to stop most fossil fuel financing by the end of 2022. Our supply problems are not limited to a short-term inability to get goods from China but extend to a decade of structural underinvestment and capacity in the so-called old economy. For years there was no real interest in investing in cement, steel, concrete, fertilizer, chemicals, paper, mining, traditional energy, and housing. Higher prices aren’t fueling new capacity, instead they’re fueling buybacks. As investors and managements don’t want to underwrite permanently higher prices or margins, very low PE multiples in these affected industries don’t inspire long-term capital commitments. Normally, high prices generate a supply reaction. Since this is not happening, all the work to curtail inflation will have to come from the demand side. As a result, prices will have to go much higher to dissuade substantial consumption as such inflation is likely to be much more persistent.”
Right after sharing his view on the inflation situation, David Einhorn revealed some positions in Greenlight Capital’s 13F portfolio and said:
“In gratuitous reference to our portfolio, this lack of new supply means that companies in these industries are likely to earn excess profits for an extended period of time, making these sectors attractive long investments.”
Greenlight Capital’s Recent Investment Portfolio and Returns
On April 19, Greenlight Capital released its first-quarter 2022 investor letter in which the fund reported that it returned 4.4% in Q1 2022, in contrast to a 4.6% decline in the S&P 500. In the first quarter of 2022, Greenlight Capital initiated 7 new positions, increased its stakes in 12 of its previous positions, reduced its position in 16 of its holdings, and exited 12 companies. The fund has a top 10 holdings concentration of roughly 70% and has investments concentrated in the services, energy, and materials segments. As of March 31, David Einhorn manages over $1.57 billion in 13F securities through Greenlight Capital. Over the past 8 quarters, his hedge fund has generated an average quarter-on-quarter return of roughly 8.35%.
Our Methodology
To determine the 10 stocks to buy now according to David Einhorn, we reviewed Greenlight Capital’s 13F portfolio for the first quarter and picked stocks that the fund added or increased its position in during the three-month period. We have ranked these stocks in increasing order of stake of the hedge fund. Along with each stock, we have mentioned the hedge fund sentiment and analyst rating as well.
10 Stocks to Buy Now According to David Einhorn’s Greenlight Capital
10. Gulfport Energy Corporation (NASDAQ:GPOR)
Greenlight Capital’s Stake Value: $10,162,000
Percentage of Greenlight Capital’s 13F Portfolio: 0.64%
Number of Hedge Fund Holders: 30
Gulfport Energy Corporation (NASDAQ:GPOR) engages in the exploration, development, acquisition, and production of natural gas, crude oil, and natural gas liquids in the United States. The company’s properties include the Utica Shale which spans an area of roughly 187,000 net reservoir acres and is located in Eastern Ohio and SCOOP which spans an area of approximately 74,000 net reservoir acres and is located in Oklahoma.
On July 19, Truist analyst Neal Dingmann raised his price target on Gulfport Energy Corporation (NASDAQ:GPOR) to $135 from $120 and reiterated a Buy rating on the shares.
In the first quarter of 2022, Greenlight Capital raised its stakes in Gulfport Energy Corporation (NASDAQ:GPOR) by 7%, bringing them to $10.16 million. The investment covers 0.64% of David Einhorn’s 13F portfolio.
At the end of Q1 2022, 30 hedge funds held stakes in Gulfport Energy Corporation (NASDAQ:GPOR). The total value of these stakes amounted to $1.03 billion, up from $796.61 million in the previous quarter with 20 positions. The hedge fund sentiment for the stock is positive.
As of July 20, Gulfport Energy Corporation (NASDAQ:GPOR) has gained 10.31% year to date, while shares of Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Tesla, Inc. (NASDAQ:TSLA) have dipped more than 15% since the beginning of 2022.
9. PLBY Group, Inc. (NASDAQ:PLBY)
Greenlight Capital’s Stake Value: $10,734,000
Percentage of Greenlight Capital’s 13F Portfolio: 0.68%
Number of Hedge Fund Holders: 19
PLBY Group, Inc. (NASDAQ:PLBY) operates in the lifestyle industry and offers various beauty and grooming products for men and women worldwide. The company operates through three segments: Licensing, Direct-to-Consumer, and Digital Subscriptions and Content. On May 17, PLBY Group, Inc.’s (NASDAQ:PLBY) board of directors authorized a $50 million accelerated stock repurchase program.
On July 20, Stifel analyst Jim Duffy downgraded PLBY Group, Inc. (NASDAQ:PLBY) to Hold from Buy and cut his price target to $7 from $11.
David Einhorn’s Greenlight Capital doubled its stakes in PLBY Group, Inc. (NASDAQ:PLBY) in Q1 2022. As of March 31, the fund owns 0.82 million shares of the company which amounts to a stake of $10.73 million. The investment covers 0.68% of David Einhorn’s 13F portfolio.
At the close of Q1 2022, 19 hedge funds were long PLBY Group, Inc. (NASDAQ:PLBY) and held stakes worth $43.27 million in the company. This is compared to 16 positions in Q4 2021 with stakes of $62.38 million.
8. Civitas Resources Inc (NYSE:CIVI)
Greenlight Capital’s Stake Value: $16,613,000
Percentage of Greenlight Capital’s 13F Portfolio: 1.05%
Number of Hedge Fund Holders: 26
Civitas Resources Inc (NYSE:CIVI) operates as an exploration and production company and engages in the acquisition, development, and production of oil and natural gas. Wall Street analysts are bullish on Civitas Resources Inc (NYSE:CIVI). On July 19, Truist analyst Neal Dingmann raised his price target on Civitas Solutions Inc (NYSE:CIVI) to $106 from $95 and reiterated a Buy rating on the shares. On July 20, MKM Partners analyst Leo Mariani initiated coverage of Civitas Solutions Inc (NYSE:CIVI) with a Buy rating and a $70 price target.
Other features that make Civitas Resources Inc (NYSE:CIVI) an attractive stock option right now are the company’s dividend capacity and valuation. As of July 20, the stock has a trailing twelve-month PE ratio of 9.39 and a forward dividend yield of 3.72%, which the company supports with its $79.55 million of free cash flow.
In the first quarter of 2022, Greenlight Capital raised its stakes in Civitas Resources Inc (NYSE:CIVI) by 136%, bringing them to $16.61 million. The investment covers 1.05% of the fund’s 13F portfolio.
At the close of Q1 2022, 26 hedge funds were bullish on Civitas Resources Inc (NYSE:CIVI) and held stakes worth $309.84 million in the company. This is compared to 26 positions in Q4 2021 with stakes of $221.1 million.
Here is what Diamond Hill Capital, an investment management firm, had to say about Civitas Resources Inc (NYSE:CIVI) in its “Diamond Hill Small Cap Fund” first-quarter 2022 investor letter:
“Other top contributors included oil and gas exploration and production company Civitas Resources (NYSE:CIVI). Its shares rise as commodities prices in general spiked on supply concerns related to Russia’s invasion of Ukraine.”
7. TD SYNNEX Corporation (NYSE:SNX)
Greenlight Capital’s Stake Value: $17,308,000
Percentage of Greenlight Capital’s 13F Portfolio: 1.09%
Number of Hedge Fund Holders: 21
TD SYNNEX Corporation (NYSE:SNX) operates in the information technology industry and specializes in business process services in the United States and internationally. On July 14, JPMorgan analyst Joseph Cardoso initiated coverage of TD SYNNEX Corporation (NYSE:SNX) with a buy-side Overweight rating and a $119 price target. Cardoso noted that the company’s strong free cash flow, which as of July 19 sits at $128.70 million, can help the company support dividends, stock buybacks, and organic & inorganic investments.
On June 28, TD SYNNEX Corporation (NYSE:SNX) declared a quarterly cash dividend of $0.30 per share of the company’s common stock. The dividend is payable on July 29, to investors of record at the close of business on July 15. As of July 19, the stock has a forward dividend yield of 1.25%.
In the first quarter of 2022, Greenlight Capital went long in TD SYNNEX Corporation (NYSE:SNX) and purchased $17.30 million worth of shares. The investment covers 1.09% of David Einhorn’s 13F portfolio.
At the end of Q1 2022, 21 hedge funds disclosed ownership of stakes in TD SYNNEX Corporation (NYSE:SNX). The collective stakes of these hedge funds amounted to $542.05 million. This is compared to 22 positions in Q4 2021 with stakes worth $632.05 million.
Like Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), and Tesla, Inc. (NASDAQ:TSLA), TD SYNNEX Corporation (NYSE:SNX) is also taking a beating in 2022 and has lost 15.21% of its value so far.
Here is what Greenlight Capital had to say about TD SYNNEX Corporation (NYSE:SNX) in its first-quarter 2022 investor letter:
“We reinitiated a position in SNX as we believe the company’s recent merger with Tech Data has created the top global IT distributor with potential for significant EPS accretion through cost and revenue synergies. The company recently held its first analyst day since the transaction closed in September at which management laid out a path that we believe will achieve EPS of $20 in a few years. We acquired our stake at an average price of $105.33, or just over 9x current year consensus EPS. SNX shares ended the quarter at $103.21.”
6. International Seaways, Inc. (NYSE:INSW)
Greenlight Capital’s Stake Value: $18,455,000
Percentage of Greenlight Capital’s 13F Portfolio: 1.17%
Number of Hedge Fund Holders: 17
International Seaways, Inc. (NYSE:INSW) owns and operates a fleet of oceangoing vessels for the transportation of crude oil and petroleum products in the international flag trade. The company operates through two business segments: Crude Tankers and Product Carriers. On July 19, Stifel analyst Benjamin Nolan raised his price target on International Seaways, Inc. (NYSE:INSW) to $31 from $27 and reiterated a Buy rating on the shares.
On June 7, International Seaways, Inc. (NYSE:INSW) raised its quarterly cash dividend to $0.12, up 100% from its prior cash dividend of $0.06. The dividend was payable on June 29 to investors of record on June 17. As of July 19, the stock has a forward dividend yield of 2.36%.
In the first quarter of 2022, Greenlight Capital initiated a position in International Seaways, Inc. (NYSE:INSW) and purchased $18.45 million worth of shares. The investment covers 1.17% of the fund’s 13F portfolio.
At the end of Q1 2022, 17 hedge funds were eager on International Seaways, Inc. (NYSE:INSW) and held collective stakes of $160.40 million in the company. This is compared to 14 hedge funds in Q4 2021 with stakes of $97.57 million. The hedge fund sentiment for the stock is positive.
Here is what Greenlight Capital had to say about International Seaways, Inc. (NYSE:INSW) in its first-quarter 2022 investor letter:
“INSW is an owner and operator of oil tankers and product carriers. Demand for oil fell during the pandemic, leading to a prolonged period of low charter rates for tankers. We acquired our shares during the quarter at an average price of $15.30, or less than 60% of INSW’s liquidation value. With oil demand having now recovered to pre-pandemic levels and no shipyard slots available for the construction of new tankers for several years, we expect a tighter market, and with it, INSW’s discount to its NAV to close. Management has been a good steward of capital, acquiring ships during low points in the cycle and repurchasing shares at attractive prices. INSW shares ended the quarter at $18.04.”
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Disclosure: None. 10 Stocks to Buy Now According to David Einhorn’s Greenlight Capital is originally published on Insider Monkey.
