In this article, we will take a look at the 15 stocks billionaire David Einhorn just bought and sold.
David Einhorn is a notable American hedge fund manager who is known for beating the stock market for a long period of time with his value stock picks and short bets. Einhorn was one of the few investors who questioned Lehman Brothers’ books before its demise started. Einhorn started Greenlight Capital in 1996. The long short value fund has had remarkable returns.
Born to a Jewish family, Einhorn also knows poker, having participated in the 2006 World Series of Poker Main Event and stood 18th in the contest, winning over $600,000, which he later donated to a charity.
Einhorn rose to fame because of his prescient short bets against Allied Capital and Lehman Brothers. In 2002, Einhorn participated in the Sohn Investment Research conference. At the event he was asked to give some investment advice. Einhorn famously recommended participants to short Allied Capital, which was at the time one of the top private equity firms. Einhorn was proven right down the road. In 2008, during the same conference, Einhorn recommended investors to short sell Lehman Brothers. He was yet again proven right.
Einhorn’s hedge fund had a remarkable time in 2022, returning 36.6% in the year, easily outperforming the S&P 500’s fall of 18.1% plunge. Since its launch in 1996, Greenlight Capital has returned 2,358.3% for an annualized return of 12.8% net. Over the same timeframe, the S&P 500 gained 864% for an annualized return of 8.9%. But most of Greenlight’s gains in 2022 came from its short bets. In a letter to investors, Einhorn, who made it to Forbes’ billionaires list in 2018, shared in his 2022 letter to investors that he spotted an ETF in 2021 that was investing in “innovation stocks” which, to Einhorn, sounded more like bubble stocks. Einhorn said his fund allocated 9% of its capital to short these stocks. The ETF fell by a whopping 76%.
“We are probably not as smart as we appeared in 2022, but we are probably not as dumb as we appeared in 2018 either,” Einhorn wrote.
But Greenlight hasn’t always shined. In July 2018 a Wall Street Journal report had mentioned several comments from unhappy investors who were pulling out of the fund. The Journal at the time said that the fund’s assets under management had fallen to $5.5 billion, compared to $12 billion in 2014. The report said the fund was down 11.3% at the end of 2017 from 2014’s end.
The End of Value Investing Era?
In an interesting interview in October 2022, Einhorn sounded skeptical about the future of value investing despite the fact that he’s a famous value investor. Einhorn believes the world has become “passive” and value investors are going “out of business” because there is “nobody to notice” the true value of stocks. Einhorn said that there was a time when value investors used to spot stocks based on valuation multiples and other traditional metrics and sell them when these stocks gained their true potential. But Einhorn believes now that era is coming to an end.
Methodology
For this article we scanned David Einhorn’s Q3 portfolio and picked stocks which he either sold completely in the period or added to his existing positions. We also chose new stocks picks of the hedge fund manager.
Stocks Billionaire David Einhorn Just Bought and Sold
15. Capri Holdings Limited (NYSE:CPRI)
Stake Value: completely sold
Fashion company Capri Holdings Limited (NYSE:CPRI) was one of the stocks completely sold off by David Einhorn’s Greenlight Capital during the third quarter of 2023, as the hedge fund dumped all 1.6 million shares of the company it had owned in the second quarter. Capri Holdings Limited (NYSE:CPRI) has lost about 8% over the past one year.
Earlier this month Capri Holdings Limited (NYSE:CPRI) posted second quarter results.
Adjusted EPS in the quarter came in at $1.13, missing estimates by $0.40. Revenue in the period fell 8.5% year over year to $1.29 billion, missing estimates by $50 million.
Here is what Greenlight Capital has to say about Capri Holdings Limited (NYSE:CPRI) in its Q3 2023 investor letter:
“In August, CPRI agreed to be sold to Tapestry for $57 per share and we promptly exited the position. Beginning with the 2022 holiday season, CPRI’s fundamentals turned increasingly negative and the company has since announced a string of earnings disappointments. When CPRI released poor fiscal year-end results in May, but insisted on maintaining overly optimistic guidance, we considered selling in frustration. With a forward bar that was set too high, we believed that further disappointments were likely. There was much hand wringing amongst investors and analysts about the earnings guidance of $6.40 per share. With the stock in the low $30s, why not lower the bar?”
14. Black Knight, Inc. (NYSE:BKI)
Stake Value: completely sold
Technology and financial services company Black Knight, Inc. (NYSE:BKI) was sold off completely by billionaire David Einhorn of Greenlight capital during the third quarter. The fund sold off 1.34 million shares of Black Knight, Inc. (BKI). Back in September, Intercontinental Exchange, Inc. (NYSE: ICE) completed acquisition of Black Knight, Inc. (NYSE:BKI).
The London Company Mid Cap Strategy made the following comment about Black Knight, Inc. (NYSE:BKI) in its first quarter 2023 investor letter:
“Increased: Black Knight, Inc. (NYSE:BKI) – Addition reflects BKI’s favorable long-term outlook, potential acquisition by Intercontinental Exchange (ICE) at a price much higher than the current market value, and large breakup fee ($725M) if ICE breaks the deal.”
13. Waverley Capital Acquisition Corp. 1 (WAVC)
Stake Value: completely sold
Blank check company Waverley Capital Acquisition Corp. 1 (WAVC) was sold off entirely by Greenlight Capital during the September quarter, as the hedge fund dumped 350,000 shares of the company in the period.
12. Sotera Health Company (NASDAQ:SHC)
Stake Value: $5,047,810
Ohio-based lab testing services company Sotera Health Company (NASDAQ:SHC) ranks 12 in our list of the stocks billionaire David Einhorn loaded up on during the third quarter as his hedge fund increased its stake in the company by a whopping 6000% in the period. The fund, as of the end of September, has a $5 million stake in Sotera Health Company (NASDAQ:SHC).
Earlier this month Sotera Health Company (NASDAQ:SHC) posted third quarter results. Adjusted EPS in the quarter came in at $0.21, beating estimates by $0.01. Revenue fell about 7.6% year over year to $263 million, missing estimates by $1.55 million.
McIntyre Partnership made the following comment about Sotera Health Company (NASDAQ:SHC) in its Q1 2023 investor letter:
“2023 started off strongly for the market, only to see a pullback later in the quarter in response to bank failures and rising cyclical risks. In January, most major indices rallied sharply, and our benchmark, the Russell 2000 Value, gained over 10% in the month, only to reverse course entirely in March and end the quarter down 1%. Thankfully, the fund managed to keep up early on and hold onto our gains. I attribute this largely to the idiosyncratic, catalyst driven nature of our holdings. In early January, Sotera Health Company (NASDAQ:SHC) announced the settlement of substantially all of its outstanding Illinois litigation, which drove shares up 100%. As the market is still digesting SHC’s legal situation, the shares have been range bound since, neither participating in the market’s rally into mid-quarter, nor falling as the market corrected in March. In response to the rally, I have adjusted our position size, but SHC remains the fund’s largest position and I plan to maintain a sizeable investment for the foreseeable future.”
11. Resideo Technologies, Inc. (NYSE:REZI)
Stake Value: $5,119,358
Greenlight Capital decreased its stake in Resideo Technologies, Inc. (NYSE:REZI) by 33% in the third quarter. The temperature systems and security controls company’s shares have gained about 3% over the past one year.
As of the end of the second quarter of 2023, 25 hedge funds tracked by Insider Monkey had stakes in Resideo Technologies, Inc. (NYSE:REZI).
ClearBridge Mid Cap Strategy made the following comment about Resideo Technologies, Inc. (NYSE:REZI) in its Q4 2022 investor letter:
“A negative macro environment also weighed on several of our industrials holdings. Resideo Technologies, Inc. (NYSE:REZI), which manufactures residential thermal and security solutions, has been hampered by supply chain disruptions and several products being destocked by distributors in addition to broader investor concerns over the impact of a recession on the housing market. However, we feel that Resideo possesses an exceptional management team with a strategic focus on cash flow generation, and as supply chain bottlenecks dissipate in the coming year the company will be able to improve margins.”
10. Herc Holdings Inc. (NYSE:HRI)
Stake Value: $15,192,206
David Einhorn’s fund increased its hold in rental equipment company Herc Holdings Inc. (NYSE:HRI) by 243% during the third quarter. Herc Holdings Inc. (NYSE:HRI) recently announced its performance targets for the next three years. Herc Holdings Inc. (NYSE:HRI) is eyeing 10% to 14% organic rental revenue compound annual growth (CAGR) from 2024 through 2026 and establish an organic adjusted EBITDA CAGR of 11% to 16% over the same period.
A total of 32 hedge funds tracked by Insider Monkey had stakes in Herc Holdings Inc. (NYSE:HRI). The biggest stakeholder of Herc Holdings Inc. (NYSE:HRI) during this period was Mario Gabelli’s GAMCO Investors which owns a $229 million stake in the company.
9. Seadrill Limited (NYSE:SDRL)
Stake Value: $16,119,697
Offshore drilling company Seadrill Limited (NYSE:SDRL) is one of the stocks in which billionaire David Einhorn increased his hold during the September quarter. Greenlight Capital upped its stake in Seadrill Limited (NYSE:SDRL) by 35% in the quarter, ending the period with a $16 million stake.
8. DHT Holdings, Inc. (NYSE:DHT)
Stake Value: $20,855,646
Crude oil tankers company DHT Holdings, Inc. (NYSE:DHT) is a new arrival in billionaire David Einhorn’s portfolio. Greenlight Capital bought a $20 million stake in DHT Holdings, Inc. (NYSE:DHT) during the third quarter. During the third quarter, DHT Holdings, Inc. (NYSE:DHT)’s earnings per share came in at $0.19, missing estimates by $0.01. Revenue in the period jumped about 20.4% year over year to $130.3 million, beating estimates by $41.36 million.
Evermore Global Value Fund made the following comment about DHT Holdings, Inc. (NYSE:DHT) in its first quarter 2023 investor letter:
“The Fund ended the quarter with two new positions – DHT Holdings, Inc. (NYSE:DHT) and Stainless Tankers ASA (STST NO; Norway). Below please find a summary of our investment in DHT Holdings.
Starting this past January, we initiated our investment in DHT Holdings, Inc. (DHT US), a $1.7 billion market cap, crude tanker operator primarily focused on the larger sized tanker vessels called Very Large Crude Carriers (“VLCC”). Founded in 2005, DHT is one of the leading global crude tanker operators with a fleet of 23 VLCCs which has a total carrying capacity of 7.2 million DWT.
We have been closely monitoring DHT since the Fund’s first in-depth foray into the shipping sector in late 2015 / early 2016. Over the years, we have observed DHT’s various milestones including Frontline’s all-share offer for DHT in 2016 (the Fund previously owned Frontline). DHT ultimately rejected Frontline’s offer and instead DHT acquired 11 VLCCs from BW Group in 2017. As part of the transaction, BW Group became a significant holder with a 33.5% stake at that time and BW Group continues to own almost 16% of DHT today. BW Group is the family-controlled holding company for the Sohmen-Pao family, who is well-regarded operator and savvy investor in the maritime industry. It should be noted that the BW Group is also an anchor shareholder in another Fund investment, Cadeler, the offshore wind installation vessel operator…” (Click here to read the full text)
7. Graphic Packaging Holding Company (NYSE:GPK)
Stake Value: $42,813,472
Greenlight Capital increased its stake in Graphic Packaging Holding Company (NYSE:GPK) by 8.71% during the third quarter of 2023, concluding the period with a $43 million stake.
Last month Graphic Packaging Holding Company (NYSE:GPK) posted third quarter results. Adjusted EPS in the quarter came in at $0.74, beating estimates by $0.03.
L1 Capital International Fund made the following comment about Graphic Packaging Holding Company (NYSE:GPK) in its second quarter 2023 investor letter:
“As a child, I am sure you tossed a coin and called out “Heads I win, tails you lose!” – seemed witty at the time. At today’s share price we believe Graphic Packaging Holding Company (NYSE:GPK) presents almost as good an investment opportunity – more like “Heads we win, tails we don’t lose!” We outlined the investment case for Graphic Packaging International in our June 2021 Quarterly Report and the substance of our views then remain current today. Right now the market is concerned about weakness in demand for paperboard packaging and medium-term increases in supply of paperboard. Both concerns are valid, but in our view are overly reflected in Graphic Packaging International’s share price.
Graphic Packaging International supplies the boxes used by food, beverages, household and personal care companies. Normally demand growth is modest but relatively stable, supported by a continuous environmentally driven shift away from plastic packaging, but it is not macro immune. Recently a number of consumer staples companies have reported weakening demand, as well as some destocking by retailers who are looking to better match demand with their inventory levels. These issues will impact Graphic Packaging International, but to a modest extent and only for a temporary period. Graphic Packaging International also benefits from supplying packaging for house brand products which are benefitting from trade-down by cost conscious consumers…” (Click here to read the full text)
6. LivaNova PLC (NASDAQ:LIVN)
Stake Value: $62,783,155
Medical device manufacturer LivaNova PLC (NASDAQ:LIVN) shares have lost about 11% over the past one year. Still, billionaire David Einhorn decided to up his stake in LivaNova PLC (NASDAQ:LIVN). Greenlight Capital increased its hold in LivaNova PLC (NASDAQ:LIVN) by 14.7% during the third quarter. The fund has a $63 million stake in LivaNova PLC (NASDAQ:LIVN).
5. Southwestern Energy Company (NYSE:SWN)
Stake Value: $65,181,186
Greenlight Capital increased its stake in Southwestern Energy Company (NYSE:SWN) by over 9% in the third quarter of 2023. As of the end of September, the fund had a $65 million stake in Southwestern Energy Company (NYSE:SWN).
Out of the 910 hedge funds tracked by Insider Monkey, 44 hedge funds reported owning stakes in Southwestern Energy Company (NYSE:SWN).
Earlier this month Southwestern Energy Company (NYSE:SWN) posted third quarter results according to which the company’s adjusted EPS came in at $0.10, beating estimates by $0.03. Revenue in the quarter fell about 68.3% year over year to $1.44 billion, beating estimates by $80 million.
Southwestern Energy Company (NYSE:SWN)’s management talked about guidance and expectations during Q3 earnings call and said:
“As we look ahead to 2024, we expect new LNG facilities to increase demand throughout the year. However, we believe strip prices are not yet high enough to incentivize production growth. Given this dynamic, we intend to continue optimizing free cash flow and capital investment to meet our dual priorities of progressing towards the $3.5 billion top end of our target debt range, while maintaining the flexibility and optionality in the business. Our unique asset base provides capital allocation flexibility between basins, commodity windows as well as assured firm market access. We will continue to optimize investment with the optionality to add back in the back half of ’24, should market fundamental support. We believe this approach to managing the business in a volatile commodity environment is prudent and will best position SWN to sustainably return capital to shareholders.
Our hedging strategy helps to ensure debt reduction while also providing upside commodity risk exposure, as we move through 2024 and 2025. We continue to target a range of 40% to 60% of natural gas price protection, when entering a new year. Basis protection is also key to commodity risk management. With the physical sales agreements and financial basis hedges, we expect to continue our practice of proactively protecting basis.”
4. The ODP Corporation (NASADQ:ODP)
Stake Value: $74,502,252
Business solutions company The ODP Corporation (NASADQ:ODP) ranks 4th in our list of the stocks bought by billionaire David Einhorn during the third quarter. Greenlight Capital increased its stake in The ODP Corporation (NASADQ:ODP) by 6.49% in the third quarter, concluding the period with a $74 million stake in the company.
3. Kyndryl Holdings, Inc. (NYSE:KD)
Stake Value: $84,380,702
IT infrastructure company Kyndryl Holdings, Inc. (NYSE:KD) ranks 3rd in our list of the top stocks billionaire David Einhorn bought during the third quarter of 2023. Greenlight Capital first bought Kyndryl Holdings, Inc. (NYSE:KD) back in the fourth quarter of 2021. During the third quarter of this year the fund increased its stake in the company by 25%, ending the period with an $84 million stake in Kyndryl Holdings, Inc. (NYSE:KD).
Tourlite Capital Management made the following comment about Kyndryl Holdings, Inc. (NYSE:KD) in its Q2 2023 investor letter:
“Kyndryl Holdings, Inc. (NYSE:KD) spun out of IBM in 2021. Spin-offs by nature reflect management’s intention to unlock shareholder value which may present an asymmetric set-up. Kyndryl’s value lies in management’s ability to work through their focused contracts – infrastructure services that, on average, generate 0% gross margin as a result of reckless bundling under IBM. More importantly, management has demonstrated their confidence in doing so by purchasing shares in the open market. Kyndryl’s latest quarter reflects solid progress; gross margins have expanded by over 200 bps sequentially and more than 300 bps year-over-year. Pre-tax margins on recent signings are in the high single digits. We expect both gross and pre-tax margins to expand as post-signings get recognized from Kyndryl’s backlog. Kyndryl continues to present compelling upside.”
2. CONSOL Energy Inc. (NSYE:CEIX)
Stake Value: $252,216,963
CONSOL Energy Inc. (NSYE:CEIX) has been a rewarding investment for billionaire David Einhorn this year as the stock has gained about 73% year to date through November 18. The hedge fund, however, cut its stake in the high-Btu bituminous thermal and crossover metallurgical coal company by 15% in the third quarter, ending the period with about $252 million stake in CONSOL Energy Inc. (NSYE:CEIX).
As of the end of the second quarter of 2023, 28 hedge funds tracked by Insider Monkey reported owning stakes in CONSOL Energy Inc. (NSYE:CEIX).
Here is what Greenlight Capital has to say about CONSOL Energy Inc. (NYSE:CEIX) in its Q3 2023 investor letter:
“CEIX shares advanced from $67.81 to $104.91 during the quarter, despite no obvious fundamental developments. It was a favorable period for energy stocks (more on that below), and CEIX abandoned its dividend in order to increase its share repurchases. With earnings expected to be over $21 per share in 2023, it is proving to be a challenge for the stock to maintain such a measly P/E multiple in the face of such a large buyback. One can make a great return when a P/E multiple expands from 3x to 5x… might 8x be too much to hope for?”
1. Green Brick Partners, Inc. (NYSE:GRBK)
Stake Value: $512,332,318
David Einhorn’s Greenlight Capital cut its stake in Green Brick Partners, Inc. (NYSE:GRBK) by 25% in the third quarter of 2023, ending the period with about $512 million stake in the company. Green Brick Partners, Inc. (NYSE:GRBK) is still the biggest holding of the hedge fund.
Greenlight Capital made the following comment about Green Brick Partners, Inc. (NYSE:GRBK) in its second quarter 2023 investor letter:
“If you would have told us on January 1 that for the first half of the year, Green Brick Partners, Inc. (NYSE:GRBK)’s stock price would advance 134%, from $24.23 to $56.80, but we were up only 13.1%, we would also want to ask, “How the heck did that happen?”
Putting those two conflicting questions together explains the first half of the year. We had a solid first half result, where GRBK was more than all of the return. The rest of the long portfolio contributed a few percent, the short portfolio struggled and macro was marginally positive.
We also benefitted by increasing net exposure (mostly by reducing shorts) in March, when a few regional banks failed and we assessed that the Federal Reserve would have to favor financial stability and stop fighting the stock market. In the second quarter, other than GRBK, both the long and short portfolios went up with the market. Fortunately, GRBK carried the day…” (Click here to read the full text)
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Disclosure: None. 15 Stocks Billionaire David Einhorn Just Bought and Sold is originally published on Insider Monkey.
