We recently published an article titled Billionaire David Einhorn’s 10 Stock Picks with Huge Upside Potential. In this article, we are going to take a look at where Seadrill Limited (NYSE:SDRL) stands against David Einhorn’s other stock picks with huge upside potential.
David Einhorn is a widely renowned hedge fund manager who co-founded Greenlight Capital in 1996. The billionaire graduated from Cornell University and gained experience in the hedge fund industry under the tutelage of Gary Siegler and Peter Collery at the SC Fundamental Value Fund. Einhorn rose to prominence in 2002, when he successfully questioned the accounting practices of Allied Capital, a private equity firm, and disclosed having a short position at the Sohn Investment Conference. The stock plummeted, sparking a heated exchange of claims between Allied and Einhorn. A five-year-long inquiry by the United States Securities and Exchange Commission (SEC) confirmed Einhorn’s claim, revealing that Allied did breach accounting rules related to securities laws.
Greenlight Capital focuses on value-oriented initiatives. The investment management firm’s primary concentration lies in long and short positions in listed equity securities. This strategy allows Einhorn to navigate both rising and falling markets, giving him flexibility during periods of uncertainty.
Greenlight Capital gained 8.2% in the first three months of 2025, boosted by a gold bet that it believes will pay out further as Trump administration policies continue to shake the economy. In a letter to clients, the firm stated that the precious metal was “by far the biggest winner” in their portfolio, increasing 19%. Gold is frequently used as an inflation hedge, and Greenlight believes the White House’s policies would only worsen inflation. “All current Administration policy roads lead to higher longer-term inflation.” the letter added. Greenlight reasoned that slower growth would push the US Federal Reserve to drop interest rates more than markets anticipate. As a countermeasure, the fund acquired a stake in SOFR futures (secured overnight financing rate), while also including tail protection in case the dollar falls significantly compared to the euro and yen.
Another aspect of the Greenlight letter was the assertion that the US equities market is in the early stages of a bear market. To that end, the firm was able to determine precisely when to opt out of its equity holdings. According to the firm’s letter:
“Bear markets do not go straight down. They are punctuated with ‘rip-your-face-off’ rallies based on big headlines, extreme investor sentiment, and experience that buying the dip usually pays off.”
Our Methodology
For this article, we examined Greenlight Capital’s Q4 2024 13F filings to list down billionaire David Einhorn’s stock picks with the highest upside potential. We ranked the companies in ascending order of their upside potential. These equities are also popular among elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Drilling rig silhouetted against a setting sun in an offshore location.
Seadrill Limited (NYSE:SDRL)
Greenlight Capital’s Q4 Stake: $32.7 million
Analyst Upside as of April 30: 160.52%
Number of Hedge Fund Holders: 42
Seadrill Limited (NYSE:SDRL) delivers offshore drilling services to the oil and gas industries globally. The company owns and operates drill ships and semi-submersible rigs that operate in shallow and ultra-deepwater in benign and hazardous environments.
In the fourth quarter alone, Seadrill Limited (NYSE:SDRL) repurchased $100 million in shares, reducing its issued share count by 22% since the program debuted in September 2023. To date, $792 million has been returned to shareholders. The company has also received about 65% of the global backlog granted to the four largest publicly traded offshore drillers, despite accounting for only 18% of the drillship fleet.
Seadrill Limited (NYSE:SDRL) received two substantial long-term contracts in Brazil back in December 2024, set to begin in 2026. These added $1 billion to the company’s backlog and included a mobilization cost that surpassed $70 million.
Patient Capital Opportunity Equity Strategy stated the following regarding Seadrill Limited (NYSE:SDRL) in its Q1 2025 investor letter:
“Seadrill Limited (NYSE:SDRL) is the fourth largest pure play deepwater drilling specialist. The company emerged from bankruptcy in February 2022 with a net cash position and is positioned to benefit from limited supply and increasing demand in the deepwater drilling rig market. Nearly half of all deepwater drilling rigs worldwide were scrapped during the last decade, while industry consolidation has created a more rational competitive landscape than we’ve seen historically. Although oil demand has remained reasonably healthy, surprisingly strong onshore production from the USA, Canada and Russia has helped keep a lid on prices. While this has negatively impacted contract rates near-term, we believe that long-term future shale supply growth will be limited, and more offshore supply will be required benefitting offshore drillers. Given its highly specialized rig fleet and minimal debt, we believe the company is well positioned to benefit from improving prices when demand rebounds. We believe Seadrill could either lead industry consolidation or become an acquisition target.”
Overall SDRL ranks 2nd on our list of David Einhorn’s stock picks with huge upside potential. While we acknowledge the potential for SDRL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than SDRL but trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks to Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
