Billionaire Investor David Einhorn Pivots From Healthcare to Agriculture With Latest Buy

Billionaire David Einhorn appeared at CNBC’s Delivering Alpha event in November. In his interview with Leslie Picker, the hedge fund manager lamented the downfall of value investing.

“‘It’s continuing to get worse,’ the hedge fund manager told Picker. ‘We are in a secular destruction of the professional asset management community,’” CNBC reported.

Key Points About This Article:

• David Einhorn’s hedge fund sold down or out of nine positions during Q3 2024, with healthcare a big part of the selling during the third quarter.
• While DME Capital Management bought or added to 15 stocks in the latest quarter, the most significant change to the portfolio was CNH Industrial (NYSE:CNH).
• The hedge fund added nearly 870,000 shares to its most significant holding of Green Brick Partners (NYSE:GRBK).
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Einhorn believes that the markets are fundamentally “broken,” suggesting that passive index investing is to blame for supporting growth stocks at the expense of value stocks.

He could be on to something.

Research Affiliates founder and chairman Rob Arnott told CNBC in a November email that, based on fundamentals, value stocks just keep getting cheaper while growth stocks keep getting more expensive.

Despite the frustration, Einhorn continues to buy and sell stocks through his hedge fund, DME Capital Management.

In the third quarter ended Sept. 30, the billionaire sold out of two stocks, reduced the positions of seven of his holdings, added to 14 positions, and bought one new stock during the third quarter.

Here are the main pieces to Einhorn’s $2.4 billion investment portfolio.

Five Big Share Sales During Q3 2024

Einhorn reduced or sold out of four holdings during the quarter with share sales of 300,000 or more.

The biggest sale in terms of shares sold was 622,470 of ODP Corp. (NASDAQ:ODP), the parent company of Office Depot and OfficeMax retail stores, and the various related businesses attached. ODP is Einhorn’s 16th-largest holding.

The hedge fund generated $20.9 million in proceeds from the sale, based on an average high of $43.31 and a low of $23.69 during the quarter. At the end of September, it still held 1.6 million shares.

However, the biggest sale by dollar value was the hedge fund’s sale of 310,577 shares of Tenet Healthcare (NYSE:THC), the Dallas-based operator of hospitals and other healthcare facilities. THC is Einhorn’s 15th-largest holding.

Based on the average of a high of $171.20 and a low of $128.49 during the quarter, the hedge fund generated $46.5 million in proceeds from the sale. It held 287,100 shares at the end of September.

The two stocks Einhorn sold out of in the quarter were Sotera Health (NASDAQ:SHC) and Talis Biomedical (OTCMKTS:TLIS). The two healthcare companies were in the 39th and 40th-largest positions, respectively. The two closeouts likely generated around $5 million in proceeds. Hardly material.

Of the largest holdings, Einhorn sold 80,982 shares of Brighthouse Financial (NYSE:BHF) during the quarter. It is the third-largest hedge fund holding, accounting for 5.58% of its $2.4 billion in assets.

It Made One Big Buy

As I said in the introduction, Einhorn bought one new stock in the third quarter: CNH Industrial (NYSE:CNH), the maker of Case and New Holland tractors, combines, and other agricultural and construction equipment.

The hedge fund acquired 7.1 million shares of CNH stock in the third quarter, making it the 10th-largest position, valued at $78.8 million as of Sept. 30. Accounting for 3.37% of the hedge fund’s portfolio, it is estimated to have paid an average price of $10.19 a share. Through Dec. 18, the shares were up around 12%.

Analysts are lukewarm about its stock. Of the 22 analysts who cover it, 11 rate it a Buy. Their target price of $14 is well above where it’s currently trading. However, it trades at an incredibly low 7.4x Wall Street’s 2024 EPS estimate of $1.54.

Other Noteworthy Buys

Einhorn added to six of his top 10 holdings in the third quarter.

The hedge fund’s largest position in terms of market value is Green Brick Partners (NYSE:GRBK), the Texas homebuilder he’s been a part of for decades. Einhorn added 869,110 shares in the third quarter. It now accounts for 30.93% of DME’s assets.

The next most significant position the billionaire added to in the quarter is HP (NYSE:HPQ), a maker of printers and PCs. In the quarter, Einhorn bought 157,860 shares, bringing its stake to 3.53 million, or 5.43% of the portfolio.

As far as I can tell, DME’s largest purchase by dollar value was for its seventh-largest holding, Liberty Global (NASDAQ:LBTYA). Liberty Global is a broadband and wireless company operating in seven countries outside the U.S., including Ireland, the Netherlands, Belgium, Luxembourg, Slovakia, the U.K., and Switzerland.

The hedge fund acquired 2.21 million shares during the third quarter, increasing its holdings by 108.31% to 4.25 million, accounting for 3.85% of its portfolio. Einhorn first bought shares in the company in Q1 2024.

Based on the high of $21.56 and low of $17.31 during the quarter, the hedge fund likely paid $43 million for the significant addition to its Liberty holdings.

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