One of our most popular professional portfolios is that of David Einhorn's Greenlight Capital. Today, we thought we'd single out some of Greenlight's recent top buys.
What follows is a closer look at 10 stocks that Einhorn bought in the most recently reported quarter ended Dec. 31, 2014. Each of these stocks was a brand new purchase for Greenlight Capital in the quarter. They are ordered here by increasing position size.
TheStreet Ratings team rates Green Dot as a hold with a ratings score of C. TheStreet Ratings Team has this to say about its recommendation:
"We rate Green Dot (GDOT) a hold. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
"We rate Green Dot (GDOT) a hold. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 7.5%. Since the same quarter one year prior, revenues slightly increased by 5.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- GDOT's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.18, which illustrates the ability to avoid short-term cash problems.
- Green Dot has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, Green Dot increased its bottom line by earning $0.94 versus $0.77 in the prior year. This year, the market expects an improvement in earnings ($1.42 versus $0.94).
- Net operating cash flow has significantly decreased to $5.65 million or 80.84% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 25.20%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 200.00% compared to the year-earlier quarter. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, GDOT is still more expensive than most of the other companies in its industry.
You can view the full analysis from the report here: GDOT Ratings Report
9. KapStone Paper and Packaging (KS) comprises 0.3% of Greenlight Capital's portfolio as of the most recently reported quarter. The fund picked up 875,000 shares of the stock in the quarter.
TheStreet Ratings team rates KapStone Paper and Packaging as a buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate KapStone Paper and Packaging (KS) a buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its notable return on equity, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Paper & Forest Products industry and the overall market, KapStone Paper and Packaging's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- KapStone Paper and Packaging's earnings per share declined by 22.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, KapStone Paper and Packaging increased its bottom line by earning $1.77 versus $1.32 in the prior year. This year, the market expects an improvement in earnings ($2.10 versus $1.77).
- KS, with its decline in revenue, slightly underperformed the industry average of 4.1%. Since the same quarter one year prior, revenues slightly dropped by 0.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Even though the current debt-to-equity ratio is 1.34, it is still below the industry average, suggesting that this level of debt is acceptable within the Paper & Forest Products industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.97 is weak.
You can view the full analysis from the report here: KS Ratings Report
8. TRI Pointe Homes (TPH) comprises 0.9% of Greenlight Capital's portfolio as of the most recently reported quarter. The fund picked up 4.4 million shares of the stock.
There is no TheStreet Ratings data on this stock at this time.
7. Covidien (COV) comprises 1.2% of Greenlight Capital's portfolio as of the most recently reported quarter. The fund picked up 851,341 shares of the stock in the quarter.
There is no TheStreet Ratings data on this stock at this time.
6. Yahoo! (YHOO - Get Report) comprises 1.4% of Greenlight Capital's portfolio as of the most recently reported quarter. The fund picked up 2 million shares of the stock in the quarter.
TheStreet Ratings team rates Yahoo! as a buy with a ratings score of B. TheStreet Ratings Team has this to say about its recommendation:
"We rate Yahoo! (YHOO) a buy. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
"We rate Yahoo! (YHOO) a buy. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- YHOO's debt-to-equity ratio is very low at 0.03 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, YHOO has a quick ratio of 1.99, which demonstrates the ability of the company to cover short-term liquidity needs.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Internet Software & Services industry and the overall market, Yahoo!'s return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for Yahoo! is currently very high, coming in at 84.00%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, YHOO's net profit margin of 13.27% significantly trails the industry average.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
You can view the full analysis from the report here: YHOO Ratings Report
5. Life Time Fitness (LTM) comprises 1.4% of Greenlight Capital's portfolio as of the most recently reported quarter. The fund picked up 1.8 million shares of the stock in the quarter.
TheStreet Ratings team rates Life Time Fitness as a buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate Life Time Fitness (LTM) a buy. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
"We rate Life Time Fitness (LTM) a buy. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, reasonable valuation levels and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 7.6%. Since the same quarter one year prior, revenues slightly increased by 6.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 26.64% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, LTM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- Life Time Fitness has improved earnings per share by 9.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Life Time Fitness increased its bottom line by earning $2.93 versus $2.68 in the prior year. This year, the market expects an improvement in earnings ($3.01 versus $2.93).
- 37.08% is the gross profit margin for Life Time Fitness which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 10.21% trails the industry average.
You can view the full analysis from the report here: LTM Ratings Report
4. Halyard Health (HYH) comprises 1.4% of Greenlight Capital's portfolio as of the most recently reported quarter. The fund picked up 2.4 million shares of the stock in the quarter.
There is no TheStreet Ratings data on this stock at this time.
3. Chicago Bridge & Iron (CBI) comprises 1.6% of Greenlight Capital's portfolio as of the most recently reported quarter. The fund picked up 2.9 million shares of the stock in the quarter.
TheStreet Ratings team rates Chicago Bridge & Iron as a hold with a ratings score of C. TheStreet Ratings Team has this to say about its recommendation:
"We rate Chicago Bridge & Iron (CBI) a hold. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
"We rate Chicago Bridge & Iron (CBI) a hold. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 5.8%. Since the same quarter one year prior, revenues rose by 13.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Chicago Bridge & Iron has improved earnings per share by 37.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, Chicago Bridge & Iron increased its bottom line by earning $4.18 versus $3.07 in the prior year. This year, the market expects an improvement in earnings ($5.17 versus $4.18).
- CBI's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 52.33%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- CBI's debt-to-equity ratio of 0.83 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that CBI's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.56 is low and demonstrates weak liquidity.
2. Keysight Technologies (KEYS) comprises 2% of Greenlight Capital's portfolio as of the most recently reported quarter. The fund picked up 4.5 million shares of the stock.
There is no TheStreet Ratings data on this stock at this time.
1. Time Warner (TWX - Get Report) comprises 4.3% of Greenlight Capital's portfolio as of the most recently reported quarter. The fund picked up 3.8 million shares of the stock.
TheStreet Ratings team rates Time Warner as a buy with a ratings score of A. TheStreet Ratings team has this to say about its recommendation:
"We rate Time Warner (TWX) a buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels, solid stock price performance and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
"We rate Time Warner (TWX) a buy. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels, solid stock price performance and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is somewhat low, currently at 0.92, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.12, which illustrates the ability to avoid short-term cash problems.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Media industry and the overall market,Time Warner's return on equity exceeds that of both the industry average and the S&P 500.
- Compared to its closing price of one year ago, TWX's share price has jumped by 33.48%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TWX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- Time Warner's earnings per share declined by 20.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, Time Warner increased its bottom line by earning $4.39 versus $3.61 in the prior year. This year, the market expects an improvement in earnings ($4.65 versus $4.39).
You can view the full analysis from the report here: TWX Ratings Report
By Stockpickr Staff
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