In this article we discuss 5 best stocks in David Einhorn’s Q1 portfolio. If you want to read our detailed analysis of Einhorn’s history and hedge fund performance, go directly to the 10 Best Stocks to Buy According to David Einhorn’s Greenlight Capital.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind, let’s take a look at Einhorn’s top stock picks:
5. Danimer Scientific, Inc. (NYSE: DNMR)
Einhorn’s Stake Value: $692,000
Percent of David Einhorn’s 13F Portfolio: 0.04%
Number of Hedge Fund Holders: 30
Danimer Scientific, Inc. (NYSE: DNMR) is a company that manufactures biodegradable plastic material. The company is currently considered one of the best stocks because its market niche aligns with environmental conservation and anti-pollution measures. It is placed fifth on our list of 10 best stocks to buy according to David Einhorn’s Greenlight Capital.
Danimer Scientific plans to invest as much as $700 million to expand its manufacturing operations at Bainbridge. The expanded facility will boost the number of available jobs by four times at Decatur County. The company currently has 100 employees at its facility in West Virginia. Danimer Scientific, Inc. (NYSE: DNMR) hopes for a future where its biodegradable plastics will be used on products sold at retail outlets.
Nelson Capital Management, in its Q1 2021 investor letter, mentioned (NYSE: DNMR). Here is what Nelson Capital Management has to say about Danimer Scientific, Inc. in its letter:
“In the materials sector, we bought Danimer Scientific (tkr: DNMR), a next-generation bioplastics company offering completely biodegradable plastics that break down in virtually any environment.
While essential to modern life, plastic products are an ongoing environmental concern due to their longevity and therefore the pollution that results. Despite nationwide efforts to recycle plastics, only 8.5% of plastics waste in t he U .S. is being recycled, according to a study by the U.S. Environmental Protection Agency. Danimer Scientific (t k r: DNMR) has developed a method to make plastic products that are 100% biodegradable and compostable without compromising on functionality. The company sells its PHA- based plastics under the brand name Nodax and is currently the only viable commercial-scale offering.
Danimer uses canola oil to create 100% biodegradable and compostable biopolymer, PHA, through a completely waste-free process. PH A biodegrades in both anaerobic (without oxygen) a nd aerobic (with oxygen) environments, and unlike other biodegradable plastics, it does not need heat, moisture, or an industrial composting plant to break d own. PHA-based plastics can effectively biodegrade in a waste treatment facility, the ocean, or even in home compost piles within 12-18 weeks after the product is discarded.
PHA plastics are versatile, adaptable and heat and UV-resistant. They have been FDA approved for food contact and are comparable in functionality to many products produced using petrochemicals. The formula can be customized to create many types of plastic resins for a multitude of p u r poses. The range of applications for products made wit h PH A is enormous and includes straws, cups, lids, bottles, produce bags, shopping bags, utensils, diaper linings, plates, wipes, toys, trash bags, seals, labels, glues and much more.
Danimer went public in late 2020 via Special Purpose Acquisition Company (SPAC). As a newly public company, Danimer’s stock price tends to be rather volatile, but we bought a small position for the long-term opportunities it offers. Dem and for PHA plastics is likely to accelerate over the next several years as corporations and the public become increasingly concerned about the environmental impact of wrappers from consumer- packaged goods. More government regulation of single- use plastics has pressured large corporations to adapt. Additionally, the Biden administration has a strong emphasis on climate change and sustainability which will provide a near- to-mid-term tailwind for Danimer. As the leading PHA innovator with over 125 patents across 20 countries, Danimer is well-positioned to benefit from these trends.”
4. CONSOL Energy Inc. (NYSE: CEIX)
Einhorn’s Stake Value: $27,401,000
Percent of David Einhorn’s 13F Portfolio: 1.90%
Number of Hedge Fund Holders: 15
CONSOL Energy Inc. (NYSE: CEIX) produces and exports high-BTU bituminous thermal coal. The company reported $284.5 million in total coal revenue for Q1 2021. GAAP net income was reported at $26.4 million during the same period. Earlier in March, the company priced $75 million 7-year tax-exempt solid waste disposal revenue bonds at 9% interest rate.
In February, Nathan Martin, an analyst at The Benchmark Company, initiated coverage on CONSOL Energy Inc. (NYSE: CEIX), rating the stock as “Buy,” with a price target of $11.
3. Concentrix Corporation (NASDAQ: CNXC)
Einhorn’s Stake Value: $71,198,000
Percent of David Einhorn’s 13F Portfolio: 4.95%
Number of Hedge Fund Holders: 23
Concentrix Corporation (NASDAQ: CNXC) is a technology company that offers customer experience solutions. The company released its financials for the quarterly ended February 2021, revealing that it generated $1.35 billion in revenue, which was 13.9% higher than its Q1 2020 revenue. It is placed third on our list of 10 best stocks to buy according to David Einhorn’s Greenlight Capital.
The company’s operating income was $134.9 million, roughly 10% above the revenue figure reported for the same quarter. The operating income was also higher than the $88.2 million that it reported in Q1 2020.
At the end of the first quarter of 2021, 23 hedge funds in the database of Insider Monkey held stakes worth $576 million in Concentrix Corporation (NASDAQ: CNXC), up from 21 the preceding quarter worth $406 million.
2. GoPro, Inc. (NASDAQ: GPRO)
Einhorn’s Stake Value: $11,836,000
Percent of David Einhorn’s 13F Portfolio: 0.82%
Number of Hedge Fund Holders: 36
GoPro, Inc. (NASDAQ: GPRO) sells drones, cameras, wearables across the globe. It was founded in 2002 and is ranked second on our list of 10 best stocks to buy according to David Einhorn’s Greenlight Capital. The company stock has offered investors more than 137% in returns over the last year. Greenlight added this stock to its portfolio in the last quarter.
For Q1 the EPS was $0.07 in line with the estimates, while revenue was up 70.9% YoY to $204 million. The hedge fund chaired by Einhorn holds close to 2.7 million shares in the company worth over $23 billion. Out of the hedge funds being tracked by Insider Monkey, Iridian Asset Management is a leading shareholder in GoPro, Inc. (NASDAQ: GPRO) with 6.14 million shares worth more than $71 million.
At the end of the first quarter of 2021, 36 hedge funds in the database of Insider Monkey held stakes worth $395 million in GoPro, Inc. (NASDAQ: GPRO), up from 28the preceding quarter worth $339 million.
In its Q4 2020 investor letter, Roubaix Capital LLC, an asset management firm, highlighted a few stocks and GoPro, Inc. (NASDAQ: GPRO) was one of them. Here is what the fund said:
“Companies like GoPro (GPRO) should benefit from the consumer rebound, but also have their own unique drivers of value over the next 2+ years. In the case of GPRO, the company launched its newest action camera, the GoPro9, under the umbrella of a new business model. The company offers a discount on the camera when customers purchase a subscription agreement that comes with additional services and benefits. The uptake of the subscription has been strong to date and offers the company a line of sight to a higher margin and more predictable revenue stream. The stock’s low double digit earnings multiple remains undemanding. We have seen this type of transformation play out in numerous situations in software, hardware and even retail companies such as RH. We see GPRO following suit and expect a return to travel later this year to be another reason for consumers to buy a new camera as they head back out on vacation.”
1. ADT Inc. (NYSE: ADT)
Einhorn’s Stake Value: $23,546,000
Percent of David Einhorn’s 13F Portfolio: 1.63%
Number of Hedge Fund Holders: 16
ADT Inc. (NYSE: ADT) is a company that offers smart home solutions, automation, and security to retail and residential customers across the U.S. It has an extensive portfolio that consists of access control systems best suited for corporate use, video surveillance, fire detection, and suppression. It is placed first on our list of 10 best stocks to buy according to David Einhorn’s Greenlight Capital.
The company recently announced its latest quarterly dividend at $0.035 per share. ADT is optimistic about growth, especially in the market for smart doorbell cameras. The segment is expected to be worth $3.27 billion between 2021 and 2025. ADT had a $48 million net loss in Q1 2021, which is better than the $300 million net loss reported in Q1 2020. Lower interest expenses made a notable contribution to the lower net loss. Its net loss per diluted share was $0.06 in Q1 2021.
ADT Inc. (NYSE: ADT) has a partnership with Google, through which it installs home security products that include Google Nest Products.
Miller Value Partners, in its Q4 2020 investor letter, said that ADT Inc. (NYSE: ADT) was one of the detractors for their portfolio in the fourth quarter of 2020. Here is what Miller Value Partners has to say about ADT Inc. in its letter:
“ADT Inc. (ADT) declined 3.5% during the quarter. The company reported strong 3Q results, which showed continued net subscriber growth with record customer retention (attrition of 12.9% versus 13.5% last year). The company reported revenue of $1.30B versus consensus of $1.25B with EBITDA of $564M versus $524M expected. The company updated full year guidance to revenue of $5.20-5.35B versus consensus of $5.24B and EBITDA of $2.15-2.225B versus $2.144B expected and free cash flow (FCF) guidance of $650-725M (raising the lower end by $25m from previous guidance). The company has set 2H21 as the time frame to launch their professionally installed and co-branded offering with Google (ahead of mid-2022 guide) and they announced that they are developing an ADT-owned, next-gen, residential technology platform allowing them to use their own proprietary software.”
You can also take a peek at 10 Best Stock Picks and Investments Of Billionaire Chamath Palihapitiya and 10 Best High-Yield Dividend Stocks to Buy According to Billionaire George Soros.
