In this article, we discuss the 10 stocks to sell now according to David Einhorn’s Greenlight Capital.
American billionaire and hedge fund manager David Einhorn founded the New York-based investment firm Greenlight Capital in 1996 with approximately $900,000 in startup capital, and currently serves as its president. Operating as a value-driven hedge fund that seeks out long-short equity strategies, Greenlight Capital is known as one of the most successful activist funds in the world. Although the hedge fund recently suffered from a rough patch in recent years, characterized by Einhorn’s failed short-bets against Tesla, Inc. (NASDAQ:TSLA), Amazon.com, Inc. (NASDAQ:AMZN), and Netflix, Inc. (NASDAQ:NFLX), the hedge fund still managed to gain 4.4% for the first quarter of 2022, outperforming the S&P 500’s -4.6% return.
While it enjoyed nearly $12 billion in 2014, the fund’s assets under management (AUM) fell significantly to stand at $1.74 billion as of the fourth quarter of 2021. During that very quarter, Greenlight Capital’s top 10 holdings represented 75.69% of its entire portfolio. The fund made 12 new purchases in the quarter and increased stakes in 7 stocks, focused on several sectors, including industrials, information technology, healthcare, and finance. Additionally, the fund sold out of 13 holdings within that quarter. As of Q1 2022, Greenlight Capital manages more than $1.57 billion in its investment portfolio, an even further decline from Q4 2021.
According to Greenlight Capital’s first quarter 13F filings, Warner Bros. Discovery, Inc. (NASDAQ:WBD), Change Healthcare Inc. (NASDAQ:CHNG), and Global Payments Inc. (NYSE:GPN) were among the top stocks in the fund’s portfolio.
David Einhorn of Greenlight Capital
Our Methodology
For the following list, we scoured through Einhorn’s 13F filings for the first quarter of 2022 and picked the holdings the fund either significantly reduced its stakes in, or sold off entirely.
Stocks To Sell Now According To David Einhorn’s Greenlight Capital
10. 23andMe Holding Co. (NASDAQ:ME)
Percentage of Decline in Stake in Q1: 26%
Stake at the end of Q1: $282,000
Number of Hedge Fund Holders: 13
23andMe Holding Co. (NASDAQ:ME) is a publicly held personal genomics and biotechnology company based in Sunnyvale, California, best known for providing direct-to-consumer genetic testing services.
Although 23andMe Holding Co. (NASDAQ:ME) experienced impressive results and decent valuations since its approval by the FDA, the shine has begun to wear off the company as its growth in the space has stagnated and as it continues to lose money. Einhorn initiated a stake in the company back in Q4 2021, and has since reduced his stake by 26% as of the first quarter of 2022.
Unlike Warner Bros. Discovery, Inc. (NASDAQ:WBD), Change Healthcare Inc. (NASDAQ:CHNG), and Global Payments Inc. (NYSE:GPN), 23andMe Holding Co. (NASDAQ:ME) is a stock that Greenlight Capital is selling.
9. Twitter, Inc. (NASDAQ:TWTR)
Percentage of Decline in Stake in Q1: 100%
Number of Hedge Fund Holders: 83
Twitter, Inc. (NASDAQ:TWTR) is an American communications company that operates the microblogging and social networking service Twitter. Shares of the company fell 3.18% on May 18 following mixed reports about its acquisition by billionaire Elon Musk. Musk has publicly revealed his reservations about acquiring the company after issues related to automated bots and fake users came to light during the most recent quarterly results.
David Einhorn has been cutting his stake in Twitter, Inc. (NASDAQ:TWTR) since the first quarter of 2021. In the first quarter of this year, he finally sold off his entire stake in the social media company.
Although Truist analyst Youssef Squali made no changes to his Hold rating and $50 price target on Twitter, Inc. (NASDAQ:TWTR) shares. He told investors that it is “hard to know” whether Elon Musk putting the deal to buy the company on pause is a negotiating tactic to get the price down considering the 24% drop in peers’ valuation or as a way to get out of the deal completely. According to the analyst, he “would not be surprised” to see a scenario where Musk may try to lower his offer price by up to 20%.
At the end of the fourth quarter of 2021, 83 hedge funds in the database of Insider Monkey held stakes worth $3.1 billion in Twitter, Inc. (NYSE:TWTR), compared to 94 in the preceding quarter worth $6.3 billion.
ClearBridge Investments, in its Q4 2021 investor letter, mentioned Twitter, Inc. (NYSE:TWTR). Here is what the fund has to say in its letter:
“Weakness among our holdings in the communication services sector was the other detractor to performance. Twitter, Inc. (NYSE:TWTR) shares sold off following weaker than expected third-quarter results, but under new leadership, we see the potential for improved execution and performance as live events and entertainment return to pre-pandemic levels.”
8. Sonos, Inc. (NASDAQ:SONO)
Percentage of Decline in Stake in Q1: 100%
Number of Hedge Fund Holders: 45
Sonos, Inc. (NASDAQ:SONO) is an American developer and manufacturer of audio products best known for its multi-room audio products. The California-based company affirmed its fiscal 2022 revenue view of $1.95 billion to $2 billion, compared with the analyst consensus of $1.98 billion.
David Einhorn’s Greenlight Capital sold its entire stake in Sonos, Inc. (NASDAQ:SONO) in the first quarter of 2022. Shares of the audio company are down 30.90% year-to-date.
Earlier this May, Jefferies analyst Brent Thill lowered the price target on Sonos, Inc. (NASDAQ:SONO) to $45 from $50 but kept a Buy rating on the shares of the company. The analyst states that he is cautious of the company’s upcoming earnings report on fears of a guidance cut. While he remains a fan of the long-term opportunity, he fears a potential downside to the company’s FY22 guidance as macro softens and consumer spending shifts.
As of Q4 2021, Sonos, Inc. (NASDAQ:SONO) was held by 45 hedge funds, down from 49 in the third quarter. Israel Englander’s Millennium Management was long over 2 million shares of Sonos, Inc. (NASDAQ:SONO) at the end of Q4 2021.
Here is what Canterbury Tollgate has to say about Sonos, Inc. (NASDAQ:SONO) in its Q3 2021 investor letter:
“The CEO of Sonos says this is the most difficult time he’s seen in the semiconductor space because of the supply chain and port difficulties. Considering Sonos is selling more in-home audio equipment than ever, his words aren’t any type of excuse. Ships are anchored out at sea waiting to get into ports, largely due to slow turnaround times because the ports have been operating at 50-70 percent of the labor they need. This should improve in the coming months with more and more people suddenly and simultaneously looking for work.”
7. Proterra Inc. (NASDAQ:PTRA)
Percentage of Decline in Stake in Q1: 100%
Number of Hedge Fund Holders: 13
Proterra Inc. (NASDAQ:PTRA) is an American automotive and energy storage company that designs and manufactures electric transit buses and electric charging systems. Although the California-based company is considered a significant player in the commercial electric-vehicle space, Proterra Inc. (NASDAQ:PTRA) is facing significant headwinds in the form of supply chain disruptions, similar to its peers in the industry.
On May 16, Citi analyst Itay Michaeli lowered the price target on Proterra Inc. (NASDAQ:PTRA) to $6.50 from $8.50 and kept a Neutral rating on the shares following the company’s Q1 results.
Numerous hedge funds pulled out of Proterra Inc. (NASDAQ:PTRA) during the fourth quarter of 2021, leaving only 13 hedge funds that were still confident in the stock, with total stakes valued at around $123.7 million.
6. Jack in the Box Inc. (NASDAQ:JACK)
Percentage of Decline in Stake in Q1: 100%
Number of Hedge Fund Holders: 27
Jack in the Box Inc. (NASDAQ:JACK) is a California-based restaurant chain with approximately 2,200 locations in the United States, primarily serving the West Coast. Due to a persisting downtrend, the stock has fallen 18.86% year-to-date, ultimately leading Einhorn to dump his entire stake in the company.
UBS analyst Dennis Geiger lowered his price target on Jack in the Box Inc. (NASDAQ:JACK) to $85 from $93 and maintained a Neutral rating on the shares ahead of the company’s earnings report. Geiger notes that more visibility into the company’s sales resiliency and progress on the development ramp is needed for the stock to narrow its valuation gap to peers.
27 hedge funds were bullish on Jack in the Box Inc. (NASDAQ:JACK) shares in the fourth quarter of 2021, holding stakes with a combined worth of $156.3 million. This is an upward trend from the preceding quarter where 26 hedge funds held $179.7 million worth of positions in the company. Millennium Management was the largest shareholder of Jack in the Box Inc. (NASDAQ:JACK) in the fourth quarter with 337,000 shares worth $29.45 million.
As opposed to Warner Bros. Discovery, Inc. (NASDAQ:WBD), Change Healthcare Inc. (NASDAQ:CHNG), and Global Payments Inc. (NYSE:GPN), Jack in the Box Inc. (NASDAQ:JACK) is one of the stocks Greenlight Capital is letting go of.
5. FREYR Battery (NYSE:FREY)
Percentage of Decline in Stake in Q1: 100%
Number Of Hedge Fund Holders: 21
Fueled by hydro and wind energy, FREYR Battery (NYSE:FREY) is a Norway-based company that designs and manufactures high-density lithium-ion batteries for electric mobility, stationary energy storage, and marine and aviation applications.
Earlier this May, FREYR Battery (NYSE:FREY) signed a conditional agreement with Powin Energy Corporation to offtake battery cells produced by FREYR for energy storage system applications in the North American market and beyond.
The EPS for FREYR Battery (NYSE:FREY) in the fiscal third quarter was -$0.30, missing market estimates by $0.20. The company’s stock has fallen 33.41% in the past six months.
Our hedge fund data shows 21 hedge funds holding stakes in FREYR Battery (NYSE:FREY) in the fourth quarter of 2021, with a total stake value of $376.4 million. Sylebra Capital Management was the largest stakeholder for the quarter, holding 12.7 million shares worth over $142 million.
4. EchoStar Corporation (NASDAQ:SATS)
Percentage of Decline in Stake in Q1: 100%
Number Of Hedge Fund Holders: 29
EchoStar Corporation (NASDAQ:SATS) is a global satellite communication and internet services supplier. The company provides services through its Hughes Network Systems and EchoStar Satellite Services business segments. Greenlight Capital built its position in EchoStar Corporation (NASDAQ:SATS) over three quarters through Q2 2021. Although gradually reducing his stake each quarter since, Einhorn sold off the remaining stakes this quarter.
By the end of Q4 2021, Insider Monkey identified 29 hedge funds that had stakes in EchoStar Corporation (NASDAQ:SATS). The total value of these stakes amounted to more than $216.82 million. As of December 31, Jim Simons’ Renaissance Technologies is the leading stakeholder in EchoStar Corporation (NASDAQ:SATS), owning roughly 2.08 million shares worth over $54.75 million.
In its Q1 2022 investor letter, Fiduciary Management Large Cap Equity mentioned EchoStar Corporation (NASDAQ:SATS) and explained its insights for the company. Here is what they had to say:
“We exited our long position in EchoStar after holding it for a year with a 22% IRR. We became concerned that the company is having trouble growing subscribers. We also sold Jack in the Box after almost 2 years with a 55% IRR. We became concerned about focus shifting to a recent acquisition and more challenging earnings comparisons going forward.”
3. Concentrix Corporation (NASDAQ:CNXC)
Percentage of Decline in Stake in Q1: 100%
Number Of Hedge Fund Holders: 23
Next up on the list of stock to dispose of according to David Einhorn is Concentrix Corporation (NASDAQ:CNXC), an American business services company specializing in customer engagement and business performance. The company is a provider of customer experience solutions and optimization, front-and-back office automation, analytics, and customer lifecycle management.
On May 9, Concentrix Corporation (NASDAQ:CNXC) announced that it has reached a definitive agreement to acquire Servicesource International Inc (NASDAQ:SREV) for $1.50 per share in an all-cash transaction valued at approximately $131 million. The transaction is expected to close in the second half of the fiscal year 2022.
According to Insider Monkey’s database, 23 hedge funds reported holding stakes in Concentrix Corporation (NASDAQ:CNXC) at the end of December 2021, with stakes worth $391.3 million. This is compared to 21 funds in the previous quarter that held stakes worth $589.9 million. Lyrical Asset Management, the leading shareholder in Concentrix Corporation (NASDAQ:CNXC) during Q4 2021, held 767,000 shares of the firm valued at roughly $137 million.
2. Cassava Sciences, Inc. (NASDAQ:SAVA)
Percentage of Decline in Stake in Q1: 100%
Number Of Hedge Fund Holders: 7
Cassava Sciences, Inc. (NASDAQ:SAVA) is a clinical-stage biotech firm that is involved in the development of treatments for neurodegenerative diseases, namely Alzheimer’s. Despite reassurances regarding simufilam, an investigational drug meant to treat Alzheimer’s, shares of Cassava Sciences, Inc. (NASDAQ:SAVA) continue to lose value, plummeting 52.34% in the past six months.
Earlier this May, Univest Securities analyst James Jang noted that Cassava Sciences, Inc. (NASDAQ:SAVA) released Q1 results that showed enrollment in the company’s Alzheimer drug clinical trials has increased, although its enrollment still “severely lags” behind the pace of other trials in the space. Jang still keeps a Sell rating and $8 price target on the shares of the company.
At the end of the fourth quarter of 2021, 7 hedge funds in the database of Insider Monkey held stakes worth $14 million in Cassava Sciences, Inc. (NASDAQ:SAVA), compared to 10 in the preceding quarter worth $34 million. Among these, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Cassava Sciences, Inc. (NASDAQ:SAVA) with 1 million shares worth more than $46 million.
1. Astra Space, Inc. (NASDAQ:ASTR)
Percentage of Decline in Stake in Q1: 100%
Number Of Hedge Fund Holders: 11
Astra Space, Inc (NASDAQ:ASTR) is a technology company that deals in space services, including satellite launch services and payload deliveries to sun-synchronous and low-inclination orbit missions, based on a proprietary, vertically integrated technology platform.
Despite bouncing back from the launch failure in February with a successful satellite deployment in March, shares of Astra Space, Inc. (NASDAQ:ASTR) seem to be in a downward spiral, dropping by 74.39% in the past six months.
Deutsche Bank analyst Edison Yu lowered the firm’s price target on Astra Space to $6 from $7 and keept a Buy rating on the shares on April 20.
In the fourth quarter of 2021, 11 hedge funds held stakes in Astra Space, Inc. (NASDAQ:ASTR) with a combined worth of $63.5 million. This is down from 13 hedge funds with stakes in the firm in the previous quarter.
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Disclose. None. 10 Stocks To Sell Now According To David Einhorn’s Greenlight Capital is originally published on Insider Monkey.
