Below we present the list of the top 5 stocks billionaire David Einhorn just added to his portfolio. For background on the billionaire money manager, a look at some of his other recent stock purchases, as well as our methodology, please see Top 10 Stocks Billionaire David Einhorn Just Added to His Portfolio.
5. Galapagos NV (NASDAQ:GLPG)
Value of Greenlight Capital’s 13F Position: $10.2 million
Number of Hedge Fund Shareholders: 27
Hedge funds are finding Galapagos NV (NASDAQ:GLPG) increasingly intriguing as ownership of GLPG among top money managers more than doubled in 2021 even as the shares lost 47% of their value. David Einhorn was one of those money managers trying to buy low on GLPG in Q4, as he bought 185,000 shares of the stock.
Galapagos NV (NASDAQ:GLPG) shares have performed better so far in 2022, gaining nearly 14%. Those gains primarily came in late January, when the company announced that former Johnson & Johnson (NYSE:JNJ) chief scientific officer Paul Stoffels would take over as Galapagos’ CEO beginning on April 1.
Galapagos NV (NASDAQ:GLPG) shares have been done in over the past two years due in part to two of the most advanced and promising drugs in its pipeline failing to receive FDA approval. The first was oral rheumatoid arthritis drug Filgotinib, which was anticipated to reach $4 billion in annual sales at its peak. The drug has been approved in the EU and Japan. Next up was idiopathic pulmonary fibrosis treatment ziritaxestat, which while effective, was deemed to have an unfavorable safety-to-benefit ratio.
4. Discovery, Inc. (NASDAQ:DISCA)
Value of Greenlight Capital‘s 13F Position: $15.35 million
Number of Hedge Fund Shareholders: 73
Greenlight Capital built a stake of 652,000 shares of Discovery, Inc. (NASDAQ:DISCA) during Q4, joining other prominent hedge funds like AQR Capital and Omega Advisors as new shareholders of DISCA. Nonetheless, there’s a 21% drop in hedge fund ownership of the stock over the past three quarters.
Discovery, Inc. (NASDAQ:DISCA) is set to merge with AT&T Inc. (NYSE:T)’s WarnerMedia division in a move that’s been approved by regulators. The tie-up will group several popular and powerful brands under one streaming umbrella called HBO Max. Included will be television channels like The Food Network and Animal Planet, as well as the bulk of Warner’s catalog of hit movies and HBO’s stable of award-winning shows. As of last May, the combined entity was anticipated to pull in $53 billion in sales in 2023.
Longleaf Partners Fund talked about Discovery, Inc. (NASDAQ:DISCA) in its Q4 2021 investor letter, noting that the stock has been unfairly grouped with other dying legacy media stocks by investors:
“While our largest holdings received at least a little market appreciation, our detractors were unreasonably punished based on headline-level misunderstandings. Discovery Communications is grouped with dying legacy media stocks, and many market participants are sitting this one out until the plan for the merged Warner Bros. Discovery is obvious. We believe Discovery is obvious. We view this as an opportunity and would also note that Discovery’s sharp stock price rally to begin 2022 indicates that at least some of the late year selling pressure might have been tax loss-selling or just plain capitulation.”
3. Intel Corporation (NASDAQ:INTC)
Value of Greenlight Capital‘s 13F Position: $15.94 million
Number of Hedge Fund Shareholders: 75
Hedge funds have grown quite a bit more bullish on Intel Corporation (NASDAQ:INTC) since the middle of 2019, as ownership of the stock has risen by 47% among their ranks. Einhorn’s activist fund is among the newest funds to take a stake in the chipmaker, buying 309,500 shares during Q4.
Intel Corporation (NASDAQ:INTC) has laid out bold plans to not only transform itself into a cutting edge chipmaker, but to also transform Europe into a leading producer of semiconductors. The company is investing tens of billions of dollars towards those goals, building new plants in Ohio, as well as investing billions in Germany, France, and Ireland to bolster every aspect of its chip design, manufacturing, R&D, and packaging.
Third Point Management praised the progress Intel Corporation (NASDAQ:INTC) has made towards its turnaround efforts in the fund’s Q4 2021 investor letter, though the fund also unloaded its Intel stake during the quarter. Here is what the fund had to say:
“2021 was a highly productive year for Intel‘s new CEO, Pat Gelsinger. Despite the stock’s tepid results, we see a compelling, underappreciated fundamental story. Intel’s “brain drain” – a key part of our thesis when we first sought to help the company confront its long-time underperformance – appears to be reversing. Since joining Intel, Mr. Gelsinger has not only brought back prominent Intel former employees but has also attracted talents from competitors such as AMD, Nvidia, Apple, and, most recently, Micron’s stellar Chief Financial Officer, David Zinsner.
We are encouraged by Intel’s aggressive investment plan, including a recently announced fabrication plant in Ohio and acquisition of Tower Semiconductors. We knew from the start that Intel’s turnaround would be complex and lengthy, and we have been pleased to see Mr. Gelsinger sacrifice near-term earnings for long-term growth.
Finally, after a series of blunders across its PC and Server product lines, Intel is finally receiving good reviews for one of its upcoming processors: Alder Lake. Tom’s Hardware, a preeminent hardware publication, called Alder Lake “a cataclysmic shift in Intel’s battle against AMD’s potent Ryzen 5000 chips.” While this is just one product across a broad lineup, and given it will take time to achieve leadership across them all, we are encouraged by these tangible signs of progress under Mr. Gelsinger’s leadership. With talent returning, an improving product suite, and a willingness to invest for growth, we believe Intel’s prospects have turned the corner. We expect that the company’s upcoming analyst day will be an ideal time for Mr. Gelsinger to articulate the progress he has made and begin to reset expectations for the company.”
2. Kyndryl Holdings, Inc. (NYSE:KD)
Value of Greenlight Capital‘s 13F Position: $16.7 million
Number of Hedge Fund Shareholders: 27
27 hedge funds were long Kyndryl Holdings Inc (NYSE:KD) on December 31, including David Einhorn’s Greenlight Capital, which owned 922,400 shares. KD shares have lost 31% of their value so far in 2022.
Kyndryl Holdings Inc (NYSE:KD) went public in the fourth quarter after being spun off from International Business Machines Corporation (NYSE:IBM). IBM shareholders received tax-free KD shares from the spinoff, though nearly half of IBM’s shareholders in our database didn’t bother holding on to their new KD positions. Interestingly, Greenlight Capital went out of its way to buy into KD, as it was not an IBM shareholder at the time of the spinoff.
That’s somewhat surprising given that Kyndryl Holdings Inc (NYSE:KD) appears to have limited growth prospects and has been unmercifully trounced by the market since making its debut. The provider of enterprise IT infrastructure services may actually see revenue decline through 2024 according to Evercore ISI analyst David Togut, after which it may be poised for modest single digit organic growth beginning in 2025.
1. Global Payments Inc. (NYSE:GPN)
Value of Greenlight Capital‘s 13F Position: $68.4 million
Number of Hedge Fund Shareholders: 68
Topping the list of David Einhorn’s biggest new portfolio additions of Q4 is Global Payments Inc. (NYSE:GPN), 506,000 shares of which were snapped by Greenlight Capital during the quarter. Hedge fund ownership of GPN is up by more than 50% since the middle of 2019.
Global Payments Inc. (NYSE:GPN) grew its GAAP revenue by 14.8% to $8.52 billion in 2021, while expanding its operating margin by 3.9 percentage points to 15.9%. Combined, those factors helped drive adjusted earnings per share 27.5% higher year-over-year, to $8.16. With a stable balance sheet and strong free cash flow generation, the company expects to return even more money to shareholders in the coming years.
David Einhorn discussed his new position in Global Payments Inc. (NYSE:GPN) in Greenlight Capital’s Q4 2021 investor letter, stating that the market has likely overestimated the potential threat to GPN from fintech disruptors, which sent its shares crashing last year and allowed the fund to purchase its stake at an attractive price. Here’s what Greenlight Capital had to say about Global Payments:
“We established a new large long position in Global Payments (GPN). GPN offers payment technology and software solutions to enable small and midsize merchants to accept electronic payments in various forms, both at physical locations and online. GPN also offers ancillary services such as payroll, time & attendance, inventory management, and industry vertical specific software (e.g. for restaurants or dentists).
GPN benefits from ongoing consumer preference shifts to electronic payments, which drove double-digit annual top line growth from 2012 through 2019. GPN benefits from inflation since it generally charges a percentage of merchant dollar volume. It earns 40% sustainable operating margins from taking small fees on billions of transactions from a diversified customer base. We rarely find such a high-quality business at a valuation that we find attractive. GPN regularly traded well above a market multiple through early 2021.
However, the stock dropped 46% between April and December as investors became worried about fintech disruption. We think the market is overstating the threat, and believe that it is more likely that a disrupter will buy GPN for its scale, salesforce and relationships, than it is to outcompete GPN. We acquired our position at an average price of $126.67 or 13x consensus expected 2022 EPS. GPN ended the year at $135.18 per share.”
For a look at some other interesting stocks that could make good additions to your own portfolio, check out 10 Best Dividend Stocks for College Students and 10 Best Biotech Stocks Under $5.
