David Einhorn is a prominent hedge fund manager and the founder of Greenlight Capital. Known for his value-oriented investment approach and activist investing, Einhorn rose to fame in the financial world for his prescient short positions, including his famous short of Lehman Brothers before its collapse in 2008.
Einhorn employs a long-short strategy, taking both long positions in undervalued stocks and short positions in overvalued ones. His approach combines thorough fundamental analysis with a contrarian mindset. Einhorn often looks for companies with strong cash flows, solid balance sheets, and potential catalysts that could unlock value.
Since founding Greenlight Capital in 1996, Einhorn has delivered impressive returns to investors, despite some challenging years. While his fund experienced a notable downturn in 2018, Einhorn has since staged a comeback. His ability to identify both long and short opportunities has cemented his reputation as one of Wall Street’s most closely watched investors.
Top Einhorn Holdings Scoring Well on Validea Models
Let’s examine five stocks from Einhorn’s recent 13F filing that score highly on Validea’s guru-inspired models:
CONSOL Energy, a producer and exporter of high-BTU bituminous thermal coal, scores exceptionally well on several Validea models.
The stock receives a 94% score on the Acquirer’s Multiple model, inspired by Tobias Carlisle. This indicates that CEIX is potentially undervalued relative to its operating earnings. With an Acquirer’s Multiple of 6.0, ranking in the 4th percentile of Validea’s database, CEIX appears attractively priced for a potential acquirer.
CEIX also scores highly (93%) on the P/E Growth Investor model, based on Peter Lynch’s approach. The company’s P/E/G ratio of 0.20 is considered very favorable, suggesting the stock may be undervalued relative to its earnings growth rate of 38.6%.
Additionally, CEIX passes the Price/Sales Investor model with a 90% score. Its price-to-sales ratio of 1.32 falls within the “good values” range for non-cyclical companies according to this Kenneth Fisher-inspired strategy.
2. Green Brick Partners Inc (GRBK)
Green Brick Partners, a diversified homebuilding and land development company, excels in momentum-based strategies.
GRBK receives a perfect 100% score on the Twin Momentum Investor model, inspired by Dashan Huang. The stock’s strong fundamental momentum (ranking in the 3rd percentile) combined with its impressive twelve-month price momentum (excluding the most recent month) makes it a top pick for this strategy.
The Momentum Investor model, which looks at both earnings and price momentum, gives GRBK an 89% score. The company’s 42.33% quarterly earnings growth and 49.71% twelve-month price return (excluding the most recent month) are particularly noteworthy.
3. HP Inc (HPQ)
HP Inc, a global provider of personal computing and printing products, scores well on several value and multi-factor models.
The Growth/Value Investor model, based on James O’Shaughnessy’s research, gives HPQ a perfect 100% score. The company passes all criteria for this strategy, including market cap, cash flow, dividend yield, and sales requirements.
HPQ also receives a 100% score on the Earnings Yield Investor model, inspired by Joel Greenblatt. With an earnings yield of 10.31% and a return on tangible capital of 390.60%, HPQ ranks highly on this quantitative value approach.
The Multi-Factor Investor model, based on Pim van Vliet’s research, also gives HPQ a 100% score. The stock’s combination of low volatility, strong momentum, and high shareholder yield makes it attractive according to this strategy.
The ODP Corporation, a provider of business services and supplies, receives high scores on several value-oriented models.
ODP scores 100% on the Value Composite Investor model, inspired by James O’Shaughnessy’s later research. The stock’s low valuation across multiple metrics (price-to-book, price-to-sales, price-to-earnings, price-to-cash flow, EV/EBITDA, and shareholder yield) makes it a top pick for this strategy.
The Acquirer’s Multiple model also gives ODP a perfect 100% score. With an Acquirer’s Multiple of 3.5, ranking in the 2nd percentile of Validea’s database, ODP appears significantly undervalued relative to its operating earnings.
ODP also scores well (91%) on the P/E Growth Investor model. Its yield-adjusted P/E/G ratio of 0.96 is considered attractive for a “stalwart” company with moderate growth.
5. Tenet Healthcare Corp (THC)
Tenet Healthcare, a diversified healthcare services company, scores highly on several growth and momentum models.
THC receives a perfect 100% score on the Earnings Revision Investor model, based on Wayne Thorp’s research. The company has seen positive revisions in its earnings estimates for both the current year and next fiscal year, with no negative revisions.
The Momentum Investor model gives THC an 89% score. The stock’s strong quarterly earnings growth (124.79%) and impressive one-year price performance (relative strength of 95) make it attractive to this strategy.
THC also scores well (88%) on the Quantitative Momentum Investor model, inspired by Wesley Gray’s research. The stock’s consistent and strong one-year momentum (excluding the most recent month) ranks it highly in this strategy.
These five stocks from David Einhorn’s portfolio demonstrate strong fundamentals and attractive characteristics across various investment strategies. While Einhorn’s own investment thesis may differ, the high scores these stocks receive on Validea’s guru-inspired models suggest they are also very strong fundamentally.
