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David Einhorn's Top 5 Trades of the 2nd Quarter

Greenlight boosts Teck and GoPro positions, axes ADT stake

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Aug 18, 2021
Summary
  • Firm boosts Teck position by over 70%.
  • Greenlight also added to its holdings in GoPro and ODP.
  • Firm eliminates stake in ADT and trims holding in API Group.
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David Einhorn (Trades, Portfolio), president of Greenlight Capital Re Ltd. (GLRE, Financial), disclosed this week that his top five trades during the second quarter included position boosts in Teck Resources Ltd. (TECK, Financial), GoPro Inc. (GPRO, Financial) and The ODP Corp. (ODP, Financial), the closure of its stake in ADT Inc. (ADT, Financial) and a reduction to its holding in API Group Corp. (APG, Financial).

Greenlight’s investing approach emphasizes the concept of intrinsic value. Additionally, the New York-based firm employs an activist approach to investing, taking positions in companies and then pushing for changes from company management.

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As of June 30, the firm’s $1.59 billion equity portfolio contains 71 stocks, with 24 new positions and a turnover ratio of 17%. The firm’s top four sectors in terms of weight are consumer cyclical, financial services, basic materials and industrials, representing 32.13%, 15.24%, 14.25% and 11.63% of the equity portfolio.

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Teck Resources

Greenlight purchased 1.723 million shares of Teck Resources (

TECK, Financial), boosting the position by 74.20% and the equity portfolio by 2.49%. Shares averaged $22.67 during the second quarter; the stock is fairly valued based on Wednesday’s price-to-GF Value ratio of 1.09.

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GuruFocus ranks the Vancouver-based mining company’s profitability 6 out of 10 on the back of operating margins that outperform more than 60% of global competitors despite three-year revenue and earnings growth rates underperforming more than 65% of global metals and mining companies.

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Greenlight said in its shareholder letter that it believes Teck may benefit from the increased demand for copper due to the “electrification of the automobile industry and expansion of green energy.” Other gurus with holdings in Teck include Dodge & Cox,

Stanley Druckenmiller (Trades, Portfolio) and AzValor International FI.

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GoPro

Greenlight purchased 2,648,100 shares of GoPro (

GPRO, Financial), expanding the position by 260.43% and the equity portfolio by 1.94%. Shares averaged $11.30 during the second quarter; the stock is significantly overvalued based on Wednesday’s price-to-GF Value ratio of 2.04.

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GuruFocus ranks the San Mateo, California-based camera and appliance hardware company’s financial strength 5 out of 10 on the back of a high Piotroski F-score of 7 despite interest coverage and debt ratios underperforming more than 70% of global competitors.

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ODP

Greenlight purchased 575,000 shares of ODP (

ODP, Financial), powering up the position by 799.37% and the equity portfolio by 1.73%. Shares averaged $44.07 during the second quarter; the stock is significantly overvalued based on Wednesday’s price-to-GF Value ratio of 1.94.

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The Boca Raton, Florida-based company operates business services and retails office products through its Office Depot and Office Max stores. GuruFocus ranks the company’s financial strength 5 out of 10 on the back of interest coverage and debt ratios that underperform more than half of global competitors despite having a high Piotroski F-score of 7.

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ADT

Greenlight sold 2,789,700 shares of ADT (

ADT, Financial), cleaning out 1.64% of its equity portfolio. Shares averaged $10 during the second quarter; the stock is fairly valued based on Wednesday’s price-to-GF Value ratio of 1.08.

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GuruFocus ranks the Boca Raton, Florida-based home security company’s financial strength 2 out of 10 on several warning signs, which include a weak Altman Z-score of 0.29 and interest coverage and debt ratios that underperform more than 90% of global competitors.

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API Group

Greenlight sold 1,033,799 shares of API Group (

APG, Financial), slashing 80.63% of the position and 1.49% of the equity portfolio. Shares averaged $21.27 during the second quarter.

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GuruFocus ranks the New Brighton, Minnesota-based construction company’s financial strength 5 out of 10 on the back of interest coverage and debt ratios underperforming more than 70% of global competitors.

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