David Einhorn is a notable American hedge fund manager who is known for beating the stock market for a long period of time with his value stock picks and short bets. Einhorn was one of the few investors who questioned Lehman Brothers’ books before its demise started. Einhorn started Greenlight Capital in 1996. The long short value fund has had remarkable returns.
Born to a Jewish family, Einhorn also knows poker, having participated in the 2006 World Series of Poker Main Event and stood 18th in the contest, winning over $600,000, which he later donated to a charity.
Einhorn rose to fame because of his prescient short bets against Allied Capital and Lehman Brothers. In 2002, Einhorn participated in the Sohn Investment Research conference. At the event he was asked to give some investment advice. Einhorn famously recommended participants to short Allied Capital, which was at the time one of the top private equity firms. Einhorn was proven right down the road. In 2008, during the same conference, Einhorn recommended investors to short sell Lehman Brothers. He was yet again proven right.
Einhorn’s hedge fund had a remarkable time in 2022, returning 36.6% in the year, easily outperforming the S&P 500's fall of 18.1% plunge. Since its launch in 1996, Greenlight Capital has returned 2,358.3% for an annualized return of 12.8% net. Over the same timeframe, the S&P 500 gained 864% for an annualized return of 8.9%. But most of Greenlight’s gains in 2022 came from its short bets. In a letter to investors, Einhorn, who made it to Forbes’ billionaires list in 2018, shared in his 2022 letter to investors that he spotted an ETF in 2021 that was investing in “innovation stocks” which, to Einhorn, sounded more like bubble stocks. Einhorn said his fund allocated 9% of its capital to short these stocks. The ETF fell by a whopping 76%.
“We are probably not as smart as we appeared in 2022, but we are probably not as dumb as we appeared in 2018 either,” Einhorn wrote.
But Greenlight hasn’t always shined. In July 2018 a Wall Street Journal report had mentioned several comments from unhappy investors who were pulling out of the fund. The Journal at the time said that the fund’s assets under management had fallen to $5.5 billion, compared to $12 billion in 2014. The report said the fund was down 11.3% at the end of 2017 from 2014’s end.
Stocks Billionaire David Einhorn Just Bought and Sold
The End of Value Investing Era?
In an interesting interview in October 2022, Einhorn sounded skeptical about the future of value investing despite the fact that he’s a famous value investor. Einhorn believes the world has become “passive” and value investors are going “out of business” because there is “nobody to notice” the true value of stocks. Einhorn said that there was a time when value investors used to spot stocks based on valuation multiples and other traditional metrics and sell them when these stocks gained their true potential. But Einhorn believes now that era is coming to an end.
Methodology For this article we scanned David Einhorn's Q3 portfolio and picked stocks which he either sold completely in the period or added to his existing positions. We also chose new stocks picks of the hedge fund manager.
Stocks Billionaire David Einhorn Just Bought and Sold
Fashion company Capri Holdings Limited (NYSE:CPRI) was one of the stocks completely sold off by David Einhorn’s Greenlight Capital during the third quarter of 2023, as the hedge fund dumped all 1.6 million shares of the company it had owned in the second quarter. Capri Holdings Limited (NYSE:CPRI) has lost about 8% over the past one year.
Earlier this month Capri Holdings Limited (NYSE:CPRI) posted second quarter results.
Adjusted EPS in the quarter came in at $1.13, missing estimates by $0.40. Revenue in the period fell 8.5% year over year to $1.29 billion, missing estimates by $50 million.
Here is what Greenlight Capital has to say about Capri Holdings Limited (NYSE:CPRI) in its Q3 2023 investor letter:
“In August, CPRI agreed to be sold to Tapestry for $57 per share and we promptly exited the position. Beginning with the 2022 holiday season, CPRI’s fundamentals turned increasingly negative and the company has since announced a string of earnings disappointments. When CPRI released poor fiscal year-end results in May, but insisted on maintaining overly optimistic guidance, we considered selling in frustration. With a forward bar that was set too high, we believed that further disappointments were likely. There was much hand wringing amongst investors and analysts about the earnings guidance of $6.40 per share. With the stock in the low $30s, why not lower the bar?”
14. Black Knight, Inc. (NYSE:BKI)
Stake Value: completely sold
Technology and financial services company Black Knight, Inc. (NYSE:BKI) was sold off completely by billionaire David Einhorn of Greenlight capital during the third quarter. The fund sold off 1.34 million shares of Black Knight, Inc. (BKI). Back in September, Intercontinental Exchange, Inc. (NYSE: ICE) completed acquisition of Black Knight, Inc. (NYSE:BKI).
The London Company Mid Cap Strategy made the following comment about Black Knight, Inc. (NYSE:BKI) in its first quarter 2023 investor letter:
“Increased: Black Knight, Inc. (NYSE:BKI) – Addition reflects BKI’s favorable long-term outlook, potential acquisition by Intercontinental Exchange (ICE) at a price much higher than the current market value, and large breakup fee ($725M) if ICE breaks the deal.”
13. Waverley Capital Acquisition Corp. 1 (WAVC)
Stake Value: completely sold
Blank check company Waverley Capital Acquisition Corp. 1 (WAVC) was sold off entirely by Greenlight Capital during the September quarter, as the hedge fund dumped 350,000 shares of the company in the period.
Ohio-based lab testing services company Sotera Health Company (NASDAQ:SHC) ranks 12 in our list of the stocks billionaire David Einhorn loaded up on during the third quarter as his hedge fund increased its stake in the company by a whopping 6000% in the period. The fund, as of the end of September, has a $5 million stake in Sotera Health Company (NASDAQ:SHC).
Earlier this month Sotera Health Company (NASDAQ:SHC) posted third quarter results. Adjusted EPS in the quarter came in at $0.21, beating estimates by $0.01. Revenue fell about 7.6% year over year to $263 million, missing estimates by $1.55 million.
McIntyre Partnership made the following comment about Sotera Health Company (NASDAQ:SHC) in its Q1 2023 investor letter:
“2023 started off strongly for the market, only to see a pullback later in the quarter in response to bank failures and rising cyclical risks. In January, most major indices rallied sharply, and our benchmark, the Russell 2000 Value, gained over 10% in the month, only to reverse course entirely in March and end the quarter down 1%. Thankfully, the fund managed to keep up early on and hold onto our gains. I attribute this largely to the idiosyncratic, catalyst driven nature of our holdings. In early January, Sotera Health Company (NASDAQ:SHC) announced the settlement of substantially all of its outstanding Illinois litigation, which drove shares up 100%. As the market is still digesting SHC’s legal situation, the shares have been range bound since, neither participating in the market’s rally into mid-quarter, nor falling as the market corrected in March. In response to the rally, I have adjusted our position size, but SHC remains the fund’s largest position and I plan to maintain a sizeable investment for the foreseeable future.”
Greenlight Capital decreased its stake in Resideo Technologies, Inc. (NYSE:REZI) by 33% in the third quarter. The temperature systems and security controls company’s shares have gained about 3% over the past one year.
As of the end of the second quarter of 2023, 25 hedge funds tracked by Insider Monkey had stakes in Resideo Technologies, Inc. (NYSE:REZI).
ClearBridge Mid Cap Strategy made the following comment about Resideo Technologies, Inc. (NYSE:REZI) in its Q4 2022 investor letter:
“A negative macro environment also weighed on several of our industrials holdings. Resideo Technologies, Inc. (NYSE:REZI), which manufactures residential thermal and security solutions, has been hampered by supply chain disruptions and several products being destocked by distributors in addition to broader investor concerns over the impact of a recession on the housing market. However, we feel that Resideo possesses an exceptional management team with a strategic focus on cash flow generation, and as supply chain bottlenecks dissipate in the coming year the company will be able to improve margins.”
David Einhorn’s fund increased its hold in rental equipment company Herc Holdings Inc. (NYSE:HRI) by 243% during the third quarter. Herc Holdings Inc. (NYSE:HRI) recently announced its performance targets for the next three years. Herc Holdings Inc. (NYSE:HRI) is eyeing 10% to 14% organic rental revenue compound annual growth (CAGR) from 2024 through 2026 and establish an organic adjusted EBITDA CAGR of 11% to 16% over the same period.
A total of 32 hedge funds tracked by Insider Monkey had stakes in Herc Holdings Inc. (NYSE:HRI). The biggest stakeholder of Herc Holdings Inc. (NYSE:HRI) during this period was Mario Gabelli’s GAMCO Investors which owns a $229 million stake in the company.
Offshore drilling company Seadrill Limited (NYSE:SDRL) is one of the stocks in which billionaire David Einhorn increased his hold during the September quarter. Greenlight Capital upped its stake in Seadrill Limited (NYSE:SDRL) by 35% in the quarter, ending the period with a $16 million stake.
Crude oil tankers company DHT Holdings, Inc. (NYSE:DHT) is a new arrival in billionaire David Einhorn’s portfolio. Greenlight Capital bought a $20 million stake in DHT Holdings, Inc. (NYSE:DHT) during the third quarter. During the third quarter, DHT Holdings, Inc. (NYSE:DHT)’s earnings per share came in at $0.19, missing estimates by $0.01. Revenue in the period jumped about 20.4% year over year to $130.3 million, beating estimates by $41.36 million.
Evermore Global Value Fund made the following comment about DHT Holdings, Inc. (NYSE:DHT) in its first quarter 2023 investor letter:
“The Fund ended the quarter with two new positions – DHT Holdings, Inc. (NYSE:DHT) and Stainless Tankers ASA (STST NO; Norway). Below please find a summary of our investment in DHT Holdings.
Greenlight Capital increased its stake in Graphic Packaging Holding Company (NYSE:GPK) by 8.71% during the third quarter of 2023, concluding the period with a $43 million stake.
Last month Graphic Packaging Holding Company (NYSE:GPK) posted third quarter results. Adjusted EPS in the quarter came in at $0.74, beating estimates by $0.03.
L1 Capital International Fund made the following comment about Graphic Packaging Holding Company (NYSE:GPK) in its second quarter 2023 investor letter:
“As a child, I am sure you tossed a coin and called out “Heads I win, tails you lose!” – seemed witty at the time. At today’s share price we believe Graphic Packaging Holding Company (NYSE:GPK) presents almost as good an investment opportunity – more like “Heads we win, tails we don’t lose!” We outlined the investment case for Graphic Packaging International in our June 2021 Quarterly Report and the substance of our views then remain current today. Right now the market is concerned about weakness in demand for paperboard packaging and medium-term increases in supply of paperboard. Both concerns are valid, but in our view are overly reflected in Graphic Packaging International’s share price.
Medical device manufacturer LivaNova PLC (NASDAQ:LIVN) shares have lost about 11% over the past one year. Still, billionaire David Einhorn decided to up his stake in LivaNova PLC (NASDAQ:LIVN). Greenlight Capital increased its hold in LivaNova PLC (NASDAQ:LIVN) by 14.7% during the third quarter. The fund has a $63 million stake in LivaNova PLC (NASDAQ:LIVN).
