David Einhorn (Trades, Portfolio)’s Greenlight Capital recently released its 13F portfolio updates for the fourth quarter of 2022, which ended on Dec. 31.
New York-based Greenlight Capital was founded by David Einhorn (Trades, Portfolio) in 1996. It invests primarily in corporate debt offerings and both long and short positions in stocks. In its early days, the hedge fund made its most significant profits from short selling weak companies such as Lehman Brothers and Conseco. Its stock investments are focused on a value-based approach that sometimes includes activism.
Based on its latest 13F filing, the firm added four new holdings to its portfolio during the quarter: Tenet Healthcare Corp. (THC, Financial), Gulfport Energy Corp. (GPOR, Financial), Funko Inc. (FNKO, Financial) and Coya Therapeutics Inc. (COYA, Financial).
Investors should be aware that 13F reports do not provide a complete picture of a guru’s holdings. They include only a snapshot of long equity positions in U.S.-listed stocks and American depository receipts as of the quarter’s end. They do not include short positions, non-ADR international holdings or other types of securities. However, even this limited filing can provide valuable information.
Tenet Healthcar
Greenlight purchased 658,900 shares of Tenet Healthcare (THC, Financial), giving the stock a 2.23% weight in the equity portfolio. During the quarter, shares traded for an average price of $46.22.
Tenet Healthcare is a Dallas-based medical care company that owns 65 acute care and specialty hospitals throughout the United States, as well as over 450 supporting facilities such as imaging centers, ambulatory surgery centers and off-campus EDs and micro-hospitals.
While Tenet is a sizeable enough player in the health care industry, it is not one of the juggernauts, which is part of what has kept it cheaper than peers at a price-earnings ratio of 16.47. The company has been reducing debt some, which is a positive sign, and the outlook for health care is generally good due to the aging population. More gurus have been buying the stock than selling it in recent quarters:
Gulfport Energy
The firm took a 125,500-share holding in Gulfport Energy (GPOR, Financial) after selling out of its previous investment in the stock in the second quarter of 2022. At the quarter’s average share price of $82.78, the new position has a 0.64% weight in the equity portfolio.
Based in Oklahoma City, Gulfport Energy is an independent hydrocarbon exploration and production company that mainly focuses on natural gas in the Appalachia and Anadarko basins.
Gulfport Energy went bankrupt near the end of 2020, seeking Chapter 11 protection as the pandemic decimated energy prices. It emerged from bankruptcy in June 2021 with a new board of directors and a resolution to do better in terms of creating shareholder value and maintaining good relationships with the communities in which it operates. The company has had some positive quarters post-bankruptcy, but it is still struggling with consistent profitability.
Funko
Einhorn’s firm invested in 521,500 shares of Funko (FNKO, Financial). During the quarter, shares averaged $14.04 apiece, so the position takes up 0.39% of the equity portfolio.
Funko is an American toy company that manufactures licensed and limited collectibles from popular franchises and pop culture. It is best known for its big-headed vinyl figurines and bobbleheads as well as plushies, action figures and more.
Funko is a fairly small stock with a market cap of $537.66 million and a history of volatility. Combine this with revenue and earnings trendlines that have been mostly flat for the past five years, and the stock has its times of undervaluation, including the present day following lackluster retail sales over the holidays. The GF Value chart indicates undervaluation, though it also flags the stock as a potential value trap due to poor financial strength (the cash ratio is just 0.07).
Coya Therapeutics
The firm bought 392,444 shares of Coya Therapeutics (COYA, Financial), giving the stock a weight of 0.13% in the equity portfolio. Shares averaged $4.65 during the quarter.
Houston-based Coya Therapeutics is a clinical-stage biotechnology company that develops multiple Treg-modulating therapies for neurodegenerative, autoimmune and metabolic diseases.
Coya’s success will hinge on whether it can commercialize one or more blockbuster treatments from its pipeline at scale. It has a solid addressable market, as more than 50 million people in the U.S. alone have autoimmune diseases, though the number is likely much higher than that because autoimmune diseases are often dismissed or misdiagnosed due to the difficulty of diagnosing them correctly. Most of these diseases have no known cures, and the available treatments are sometimes deemed to be worse than the diseases themselves, depending on severity.
See also
The firm’s other notable fourth-quarter trades included additions to Global Payments Inc. (GPN, Financial) and Kyndryl Holdings Inc. (KD, Financial) as well as the sale of its entire Intel Corp. (INTC, Financial) position. Its holdings in Twitter Inc. and Change Healthcare Inc. were acquired by Elon Musk and UnitedHealth Group (UNH, Financial), respectively.
As of the quarter’s end, Greenlight Capital held common shares of 41 stocks valued at a total of $1.44 billion. The turnover for the quarter was 9%. The top holding was Green Brick Partners Inc. (GRBK, Financial) with 28.40% of the equity portfolio, followed by Brighthouse Financial Inc. (BHF, Financial) with 11.36% and CONSOL Energy Inc. (CEIX, Financial) with 8.17%.
By sector, the firm was most invested in consumer cyclical stocks, followed by energy and financial services.
