David Einhorn is a professional investor who runs the Greenlight Capital hedge fund. Since its inception in 1996, Greenlight Capital has racked up some impressive gains. The fund outperformed the market through the late 1990s bull run and garnered considerable attention for shorting Lehman Brothers’ stock prior to the investment bank’s collapse during the 2008 financial crisis. Einhorn claims to focus on intrinsic value and invests in companies that have the potential to achieve consistent returns and safeguard capital in any market, bull or bear. David Einhorn stocks are those that his hedge fund invests in.
Started with $900,000, Greenlight Capital at one point had $12 billion of assets under management. Today, Greenlight is scaled down to about $2 billion of assets and 25 employees, making it one of the smaller hedge funds on Wall Street. Still, Einhorn’s knack as a stock picker is impressive. So, too, is his ability to short stocks, a risky process that has cost many investors dearly. Let’s take a look at three David Einhorn stocks to buy in Q2 2024.
Consol Energy (CEIX)
One of Einhorn’s largest positions is Consol Energy (NYSE:CEIX), a Pennsylvania coal producer. This is a bit of a contrarian pick as investing in coal runs counter to the societal shift towards cleaner forms of energy production. A value investor, Einhorn no doubt likes the valuation on CEIX stock.
Trading at four times future earnings estimates, Consol Energy looks extremely cheap right now compared with the rest of the market. The stock doesn’t pay a dividend, but its performance has been decent.
Although it’s down 17% this year, CEIX stock has risen nearly 38% over the last 12 months and is up 154% over the past five years. The stock’s performance has been driven by sound fundamentals. Consol Energy has managed to grow its earnings an impressive 57.8% over the last five years, compared to growth of 13.8% for the overall market. In the past year alone, earnings have increased 40%. The company is also cash rich, reporting free cash flow of $687 million at the end of 2023.
It might be that the market has to catch-up to David Einhorn when it comes to CEIX stock.
ODP Corp (ODP)
Another contrarian pick given our post-pandemic hybrid work world is ODP Corp (NASDAQ:ODP), the company behind Office Depot and OfficeMax. Essentially, ODP specializes in office supplies. Again, this pick seems a bit odd given how many office buildings are sitting vacant while people continue to work remotely from home. But the valuation looks right and the performance has been good for ODP stock. The shares currently trade at 14 times future earnings estimates.
While ODP stock is down 9% this year, the share price has more than doubled (up 111%) over the past five years. Since the pandemic hit in March 2020, ODP stock has increased 229%. Like Consol Energy, ODP Corp has an impressive track record of earnings growth, and analysts forecast that the company’s earnings per share (EPS) will continue to grow an average of 12.3% per year over the next five years.
Green Brick Partners (GRBK)
Last but not least is David Einhorn’s biggest holding, Green Brick Partners (NYSE:GRBK). Green Brick Partners is a Texas-based residential homebuilder that operates in its home state plus Georgia, Florida and Colorado.
It shares many of the same attributes as the other names on this list. It has a low valuation, strong earnings growth and steady share price appreciation. Einhorn also seems to favor small-cap stocks as Consol Energy, ODP and Green Brick Partners each have a market capitalization of less than $2.6 billion.
Currently, GRBK stock is trading at eight times future earnings estimates. The share price has been bullish, delivering gains of 9% this year, 52% over the last 12 months and 524% through the past five years. It’s easy to see why Green Brick Partners is the largest position in Greenlight Capital’s portfolio.
Green Brick Partners has a return on capital employed of 21%, which is ahead of the 14% average among home builders. Earnings growth is consistently strong and the company managed to deliver a record number of new homes in 2023 despite interest rates roiling the national housing market. As far as David Einhorn stocks go, it’s easy to see why GRBK is a winner.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
