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Billionaire David Einhorn’s 10 Stock Picks with Huge Upside Potential

In this article, we will take a look at billionaire David Einhorn’s 10 stock picks with huge upside potential. To skip our analysis of David Einhorn’s investment strategy and Greenlight Capital’s previous performance, you can go directly to see the Billionaire David Einhorn’s 5 Stock Picks with Huge Upside Potential.

David Einhorn is a renowned American hedge fund manager known for his ability to beat the market over a long period of time primarily through long and short investments in publicly listed equity securities as well as distressed debt. Einhorn founded Greenlight Capital, Inc., a value-oriented investment management firm, in 1996, and currently serves as its President. In addition, Einhorn also serves as chairman of the boards of publicly listed Greenlight Capital Re, Ltd. and Green Brick Partners, Inc.

Einhorn mainly came to the limelight with his short bets against Allied Capital and Lehman Brothers. In 2002, David Einhorn opened a short position in Allied Capital, a private finance firm, and claimed that the company was involved in fraudulent accounting practices. It was later acquired by Ares Capital Corporation in 2010 after a long public spat between the company and Einhorn. Another notable short investment that brought fame for the hedge fund manager was Lehman Brothers in 2007, where Einhorn argued that the investment banker had massive exposure to illiquid real estate investments that were improperly accounted for. You can read more about Einhorn’s activist targets and their long-term returns in our recently published article: Long-Term Returns of David Einhorn’s Activist Targets

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%. Greenlight Capital recently released its Q3 2023 investor letter. The firm’s funds returned 12.9%, net of fees and expenses, in the third quarter, and 27.7% in the first nine months of 2023, compared to -3.3% and 13.1% return for the S&P 500 Index, respectively.

Greenlight Capital’s current portfolio was valued at nearly $1.76 billion as of September 30, 2023. The biggest position in the portfolio was Green Brick Partners, Inc., a diversified homebuilding and land development company, with the Firm owning nearly $512 million worth of its shares. The long equity positions of the firm were highly concentrated among the top 10 holdings which, together, accounted for 79.59% of the weightage of the 13F portfolio. The biggest addition to the portfolio, in dollar terms, was in SPDR Gold Trust (NYSEARCA:GLD) with 90% increase in the number of shares owned by the firm.

David Einhorn and his Greenlight Capital team believe that geopolitical tension is expected to have significant impact on the markets in the upcoming days and expect oil prices to rise. The firm made the following comments about the outlook in its investor letter:

“Higher oil prices would squeeze the consumer and likely cause a recession. The resulting inflation would also put the Federal Reserve in the uncomfortable position of having to fight rising prices at a time of rising unemployment. This leaves the market outlook very concerning. We are positioned accordingly. With our sale of CPRI, we have limited exposure to the U.S. consumer. Our positive net exposure is expressed almost entirely through the energy sector, and we have added a large macro position via futures and options that will benefit from much higher crude oil prices throughout 2024. If we are right, current extreme levels of geopolitical tension will lead to lower stock prices over a timeframe that lasts more than a couple of hours. At that point, we intend to be positioned to buy beaten-down stocks and some truly distressed debt, should the opportunity present itself. The complacent investor view that geopolitics should be ignored might be true, except for the times when it isn’t. We suspect we are in one of those times.”

Methodology

To find billionaire David Einhorn’s 10 stock picks with huge upside potential we first identified the top holdings of Greenlight Capital's 13F portfolio, as of Q3 2023. We ranked these stocks based on the upside potential with reference to the average analyst price targets for these stocks as per their respective share prices as of November 28. The stocks on this list are the top 10 stocks ranked based on their upside potential.

10. New York Community Bancorp, Inc. (NYSE:NYCB)

Greenlight Capital's Stake Value: $19,554,809

Upside Potential as of December 1: 28.93%

Hicksville, New York-based New York Community Bancorp, Inc. (NYSE:NYCB) is the parent company of Flagstar Bank, N.A., one of the largest regional banks in the country. It operates 436 branches, including strong footholds in the Northeast and Midwest and exposure to high growth markets in the Southeast and West Coast.

On October 26, New York Community Bancorp, Inc. (NYSE:NYCB) reported the financial results for Q3 2023. Its total interest income increased by 197% y-o-y to $1.5 billion while it recorded a net income of $207 million. Its normalized EPS of $0.36 exceeded consensus estimates by $0.01.

On October 24, the Board of Directors of New York Community Bancorp, Inc. (NYSE:NYCB) declared a quarterly cash dividend of $0.17 per share on the Company's common stock. This represents a dividend yield of 6.85% based on the share price on December 1.

As of Q3 2023, New York Community Bancorp, Inc. (NYSE:NYCB) shares were owned by 35 hedge funds with the total shares held by them valued at $420 million. David Einhorn’s Greenlight Capital owned 1.7 million of its shares, valued at $19.6 million. The stock accounted for 1.11% of its 13F portfolio.

9. Herc Holdings Inc. (NYSE:HRI)

Greenlight Capital's Stake Value: $15,192,206

Upside Potential as of December 1: 29.61%

Bonita Springs, Florida-based Herc Holdings Inc. (NYSE:HRI), is a leading equipment rental supplier with approximately 382 locations in North America. It offers a broad portfolio of equipment for rent including aerial, earthmoving, material handling, trucks and trailers, air compressors, compaction, and lighting.

On October 23, Herc Holdings Inc. (NYSE:HRI) released its financial results for Q3 2023 with nearly 20% year-over-year increases across revenue and net income figures. It generated a revenue of $908 million and a net income of $113 million which translated into an EPS of $3.98, slightly below the consensus.

Herc Holdings Inc. (NYSE:HRI) initiated quarterly dividends in Q4 2021 and has increased its dividend payout on annual basis in both years. In February, the Board of Directors of the company raised the dividend amount by 10% to $0.6325 per share which represents a dividend yield of 1.98%.

As of Q3 2023, Herc Holdings Inc. (NYSE:HRI) shares worth $578 million were owned by 28 prominent hedge funds tracked by Insider Monkey. David Einhorn’s Greenlight Capital held nearly 0.13 million shares of the company, 244% more than the previous quarter, and valued at $15.2 million. The stock accounted for 0.86% of the total portfolio value for the hedge fund.

8. Weatherford International plc (NASDAQ:WFRD)

Greenlight Capital's Stake Value: $38,846,868

Upside Potential as of December 1: 34.37%

Weatherford International plc (NASDAQ:WFRD) is a leading global energy services company providing equipment and services used in the drilling, evaluation, well construction, completion, production, intervention, and responsible abandonment of wells in the oil and natural gas exploration and production industry as well as new energy platforms.

Weatherford International plc (NASDAQ:WFRD) posted a strong financial performance in Q3 2023. Its revenues increased by 17% y-o-y to $1.3 billion while its net income increased by 339% y-o-y to $123 million. The normalized EPS of $1.66 surpassed consensus estimates by $0.48.

Following the earnings release, Piper Sandler analyst Luke Lemoine raised the price target for Weatherford International plc (NASDAQ:WFRD) shares to $135 from $116 and maintained an ‘Overweight’ rating for the shares. The target price represents a potential upside of 47.83% based on the share price on December 1.

As of September 30, Greenlight Capital held nearly 0.43 million shares of Weatherford International plc (NASDAQ:WFRD), worth $38.9 million. The company represented 2.20% of the firm’s 13F portfolio.

7. LivaNova PLC (NASDAQ:LIVN)

Greenlight Capital's Stake Value: $62,783,155

Upside Potential as of December 1: 34.78%

LivaNova PLC (NASDAQ:LIVN) is a global medical device company creating neuromodulation devices and cardiopulmonary products. It is based in London, UK, and maintains a presence in more than 100 countries.

On November 1, LivaNova PLC (NASDAQ:LIVN) released its financial results for Q3 2023. Its revenues increased by 13% y-o-y to $286 million while its net loss shrunk by 93% y-o-y to $7 million. The normalized EPS of $0.73 surpassed consensus estimates by $0.09.

On August 30, LivaNova PLC (NASDAQ:LIVN) announced that it received U.S. FDA 510(k) clearance and CE Mark for its Essenz™ In-Line Blood Monitor, which provides continuous measurement of blood parameters to perfusionists throughout cardiopulmonary bypass procedures.

As of Q3 2023, LivaNova PLC (NASDAQ:LIVN) shares were held by 32 hedge funds with the total shares held by them valued at $710 million. The stock was among Greenlight Capital’s top 10 portfolio holdings based on weightage and accounted for 3.56% of portfolio value with 1.2 million shares worth $62.8 million held by the firm. The firm increased its ownership by 15% during the quarter.

6. SeaDrill Limited (NYSE:SDRL)

Greenlight Capital's Stake Value: $16,119,697

Upside Potential as of December 1: 35.60%

SeaDrill Limited (NYSE:SDRL) is a leading offshore drilling contractor utilizing advanced technology to unlock oil and gas resources for clients across harsh and benign locations around the globe. It conducts operations across all kinds of geographies, from shallow to ultra-deepwater environments.

In April, SeaDrill Limited (NYSE:SDRL) completed the previously announced acquisition of Aquadrill LLC, an offshore drilling company with a fleet comprising of eight drilling units. The all-stock transaction valued the target company at $958 million and was announced in December last year.

On November 27, SeaDrill Limited (NYSE:SDRL) released its quarterly results for Q3 2023. It generated total operating revenues of $414 million and net income of $90 million. It reported a normalized EPS of $1.04 for the quarter, which surpassed the consensus estimates by $0.21.

As of Q3 2023, 38 hedge funds out of the 910 hedge funds tracked by Insider Monkey were bullish on SeaDrill Limited (NYSE:SDRL) and held its shares valued at $1.3 billion. Greenlight Capital held 0.36 million shares, 36% more than the previous quarter and valued at $16.1 million. The stock accounted for 0.91% of the portfolio.

 

Click to continue reading and see Billionaire David Einhorn’s 5 Stock Picks with Huge Upside Potential.

 

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Disclosure: None. Billionaire David Einhorn’s 10 Stock Picks with Huge Upside Potential is originally published on Insider Monkey.