Greenlight Capital Fund recently released its Q4 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 5.2% in 2020, underperforming its benchmark, the S&P 500 Index which returned 18.4% in the same period. You should check out Greenlight Capital’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q4 2020 Investor Letter, Greenlight Capital highlighted a few stocks and Resideo Technologies Inc. (NYSE:REZI) is one of them. Resideo Technologies Inc. (NYSE:REZI) provides home comfort and security solutions. In the last three months, Resideo Technologies Inc. (NYSE:REZI) stock gained 128.1% and on January 21st it had a closing price of $25.11. Here is what Greenlight Capital said:
“REZI is a residential HVAC and security business that was spun out of Honeywell in 2018. REZI enjoys strong recurring revenues generated through replacement sales into a base of 150 million homes. However, execution errors and overspending following the spinout caused REZI’s margins to plummet. By the time the pandemic struck, REZI was already in the process of implementing a turnaround plan, and we used the sell-off in April to establish a small position at an average entry price of $4.88.
We believe that the new management team is well-equipped to capitalize on the opportunity set in both the core business as well as REZI’s low voltage distribution business (ADI). In the most recent quarter, progress made on existing turnaround projects combined with the tailwind of pandemic-driven spending on the home resulted in REZI nearly doubling expected profits and guiding well ahead of consensus for the fourth quarter. We see the potential for this to continue and for earnings to grow from around $2 per share in 2021 to $3 per share in the coming years. The shares ended the quarter at $21.26 and REZI is now a medium-sized position.”
In Q2 2020, the number of bullish hedge fund positions on Resideo Technologies Inc. (NYSE:REZI) stock decreased by about 20% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in REZI’s growth potential. Our calculations showed that Resideo Technologies Inc. (NYSE:REZI) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
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Disclosure: None. This article is originally published at Insider Monkey.