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David Einhorn Warns: Value Investing May Never Recover

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David Einhorn’s Greenlight Capital enjoyed a robust return of 36.6% net in 2022, significantly outperforming the S&P 500’s 18.1% plunge. Since its inception in May 1996, Greenlight Capital has returned 2,358.3% for an annualized return of 12.8% net. Over the same timeframe, the S&P 500 gained 864% for an annualized return of 8.9%.

Value investing may never recover

In their 2022 year-end letter to investors, the Greenlight Capital team said the year was their best ever in many ways, drawing comparisons between 2022 and 2001. The last technology bubble popped in 2001, but the market didn’t bottom out until 2009.

The team noted that the “enormous bull market” that persisted between 2009 and the market’s top toward the end of 2021 culminated in a “massive bubble,” especially in the most speculative stocks. They feel most investors during this timeframe either never included valuation in their investment process or ceased to include it.

On one hand, Einhorn’s team warned that value investing probably won’t ever recover from the “debilitating” outflows that shifted to passive or other strategies. However, on the other, they feel the greatly reduced amount of competition for value stocks will give their strategy a boost.

2022 returns

Einhorn’s team believes their unwillingness to take the risks most other investors dove into enabled them to outperform in 2022. As a result, they questioned whether the risks that drove significant outperformance for many investors during the bull run were worth taking.

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In 2022, Greenlight Capital’s long positions returned 2.4% with 30.2% alpha, while its shorts returned 30% with 15% alpha. The fund’s index hedges gained 5% while losing 0.1% alpha, while its macro positions gained 5.7% with 5.8% alpha.

2022 was the best year for the macro portfolio, with the two significant winners being interest rates and inflation swaps. The fund had bet that the Federal Reserve would tighten more than the market had expected. It had also wagered that a combination of reported inflation and expectations would rise more than expected.

New position: Tenet Healthcare THC

Although Einhorn’s team believes we’re in the middle of a bear market, Greenlight established a new medium-sized long position in Tenet Healthcare during the fourth quarter. The company operates hospitals and ambulatory surgery centers.

Over the last few years, Tenet has grown and shifted its business mix toward its higher-margin outpatient surgeries, enabling it to generate significant cash flows that Greenlight believes are sustainable. In 2022, the company cut its guidance due to COVID and inflationary headwinds, sending its shares plunging by more than 50% through late October.

The fund believes that pullback presented an attractive opportunity to tap into Tenet’s transformation. They expect its growth in ambulatory surgery centers to remain strong as its reduced hospital portfolio improves in both costs and volumes.

Einhorn purchased its Tenet shares between late December and early January at an average price of $48.61, or 8.7 times the company’s 2023 consensus estimates. The company recently announced its plan and started to repurchase about 20% of its outstanding shares by the end of 2024.

Green Brick Partners

Green Brick Partners and Danimer Scientific were Greenlight’s only two significant losing positions on the long side. Green Brick generated robust operating results in 2022, although the challenging forward-looking macro outlook caused by higher interest rates more than offset those results.

Greenlight expects the company to earn $6.02 per share when all the results for 2022 are in, versus the estimate of $4.29 per share at the beginning of the year. However, Einhorn’s team noted that the 2023 estimates have declined from $4.62 to $3.17 per share, which sent Green Brick shares plummeting.

They expect the stock to do better this year after the market decides the estimates have sufficiently priced in the slowing housing market. At that point, the Einhorn believes the focus will shift to determining the correct multiple for Green Brick on trough earnings. They feel the company is well-positioned as a low-cost operator in demographically attractive markets.

Danimer Scientific

Greenlight Capital has written about Danimer Scientific off and on for several quarters. In 2021, the fund shifted most of its position from the company’s common shares to its convertible bonds, but later in 2022, it added to its stock position. Unfortunately, Danimer Scientific’s bonds and stock both had a terrible year.

On one hand, the Greenlight team admits Danimer Scientific is a cash-burning technology SPAC. As a result, it’s not surprising that the company’s securities have plummeted alongside those of other unprofitable technology SPACs.

However, the fund remains convinced that Danimer Scientific has a viable product and should remain solvent. They pointed out that the company’s converts are trading below 40% of par, and its market cap has plunged below $200 million. Thus, there is a lot of optionality if the thesis ends up being correct.

Big winners in 2022

The big winners on the long side in 2022 were Atlas Air Worldwide, CONSOL Energy, Rheinmetall, Teck Resources, Twitter and the privately held Siltstone Capital.

CONSOL Energy rode the soaring coal prices from $22.71 to $65 per share and paid $2.05 per share in dividends. The company ended the year with no net debt. In 2023, the fund’s management expects CONSOL to see much higher earnings and significant free cash flow, most of which may be returned to shareholders.

David’s private holding, Siltstone Capital, offers vehicles that invest in Utica and Marcellus shale mineral rights. The fund enjoyed sizable gains from those holdings via royalties spurred higher by the 46% increase in 2022-2026 average Henry Hub natural gas prices and an improved outlook for drilling activity.

Meanwhile, Tech benefited from higher metallurgical coal prices and expectations of its new copper mine coming online toward the end of 2022. The stock rose from $28.82 to $37.82 per share. Teck’s 2022 earnings are expected to come in at $7.15 per share, much higher than the $4.68 per share estimated at the beginning of the year.

Rheinmetall benefited from the broad-based re-rating of defense stocks following Russia’s invasion of Ukraine. David sold the shares in 2022 after a sizable gain. The firm also exited Atlas Air Worldwide after it agreed to be sold to a private equity consortium.

Finally, Elon Musk closed his acquisition of Twitter at $54.20 per share, as Einhorn’s team had predicted, taking the company private. Twitter was the fund’s third-largest contributor in 2022.

Bubble basket

Finally, the team outlined their long-standing bubble-basket short strategy, which boosted their 2022 returns significantly. They define bubble stocks as those that could fall at least 80% and still not look cheap to them. The fund’s goal to short speculative stocks just as the bubble appears to have popped.

While the fund has maintained its bubble-basket strategy off and on since 2014, it initiated its fifth such basket in January 2022, when it shifted from cautious to bearish. Greenlight included 31 stocks in its basket with a 6% combined short position in 2022. The basket remains in place. As of the end of 2022, 12 of the stocks had plunged at least 50%, and only one was positive, with a 23% gain.

David also maintains its short of the components of an actively managed ETF of so-called “innovation” stocks. The fund’s management thought the ETF’s components shared similar characteristics with the names they included in their bubble baskets. The fund shorted this basket in early 2021 and later ramped the position to 9% of capital. The basket has plummeted 76% since the fund’s initial entry.

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Bitcoin ATM – Learn More About Quick Change Cash to Cryptocurrency

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Cryptocurrencies such as Bitcoins have become a global currency. They are well-known globally and more popular than traditional money, for example American Dollar.

Bitcoin ATM

This article will tell more about Bitcoin ATMS with zero commissions, how to change crypto to cash in a short time or how to find the most beneficial Bitcoin ATMs.

  1. Bitcoin ATM with 0% commission
  2. Bitcoin ATM can change cash on several cryptocurrencies
  3. How to change cash on cryptocurrency?
  4. Where to learn about bitcoin ATMs?
  5. Is it safe to use Bitcoin ATMs?
  6. What are the Bitcoin ATMs locations?
  7. What are the opening hours of Bitcoin ATMs?
  8. Where can you find some information on exchange rates?
  9. Where can you find some more information on Bitcoin ATMs?

Bitcoin ATM with 0% commission

When you want to buy and sell bitcoin you do not have to pay an additional fee in your area like many different bitcoin ATMs charge (even 8%). Every bitcoin ATM provides transactions with 0% commission. What is more, the clients can get various discounts and enjoy higher exchange rates.

Bitcoin ATM can change cash on several cryptocurrencies

Although Bitcoin is the most recognizable cryptocurrency in the world, there are also other cryptocurrencies worth mentioning. What is more, they are also available in the bitcoin ATM. They are the following: Tether (USDT), Litecoin (LTC), Tron (TRX) and Ether (ETH). The whole process – it means converting cash to your favourite cryptocurrency lasts a few minutes.

It is very intuitive and every user can change cash to crypto without any problems.

How to change cash on cryptocurrency?

It is very simple to use the Bitcoin ATM. It is similar to withdrawing money from a standard ATM. The first thing you have to do is to insert cash and then scan qr code. Next, you have to select the transaction details (exchange rate and transaction fee) and finally the cryptocurrency is transferred to your wallet.

It is childishly easy to use the bitcoin ATM. As an outcome, it is also popular in Ukraine where the war with Russia takes place.

Where to learn about bitcoin ATMs?

If you want to get some relevant knowledge on bitcoin ATM and how to buy and sell bitcoin and litecoin you should visit the official social media of bitcoin ATM. There is a tutorial for beginners who have never tried the bitcoin ATM and want to know what bitcoin ATMs are.

The popular social media where you can find the information are You tube and Facebook. Furthermore, it is worth watching it regularly to learn more about special offers or unique discounts for anonymous bitcoin buyers and sellers.

Is it safe to use Bitcoin ATMs?

The clients should feel safe during converting cash to cryptocurrency. That is why, the bitcoin ATMs are located in public places, mainly in the shopping malls where the advance monitoring system is provided. What is more, it is also possible to change cash to cryptocurrencies in independent places. However, in those places the doors are locked and the person who is doing the transaction can feel safe.

Bitcoin ATM
photo credit: Sharon Hahn Darlin / Flickr

What are the Bitcoin ATMs locations?

If you need to change cash to cryptocurrency, you have to see the bitcoin ATM map. There you can find all bitcoin ATMs in your area. What is more, you can get some interesting details about the bitcoin ATM. There is provided the name of the city with a detailed address as well as additional information on the bitcoin ATM. Moreover, you can find there also a picture of the bitcoin ATM and available funds to withdraw at the moment.

What are the opening hours of Bitcoin ATMs?

If you are in Madrid, the capital city of Spain you can check the opening hours of Bitcoin ATMs Madrid online. At the same website where you can check the location of a bitcoin ATM, there is some information about opening hours. The majority of bitcoin ATMs are open 24 hours, 7 days a week and they are available in the shopping malls or independent places. However, some of them are available in limited time.

That is why, it is always worth checking the opening hours before you visit the bitcoin ATM.

Where can you find some information on exchange rates?

The exchange rate is the crucial information when it comes to converting cash to cryptocurrencies. However, it is not a problem when you use the bitcoin ATMs. At the website where the detailed address and opening hours are provided you can also find some information about the current exchange rate.

It is worth selecting the place that offers the best exchange rate before you leave your house.

Where can you find some more information on Bitcoin ATMs?

Before you make a transaction at a bitcoin ATM, you should learn more about the bitcoin ATMs. You can do it at the official website of the device or at one of the YouTube channels where the latest information and detailed tutorial are provided.

You should also visit Facebook and Instagram where the latest news is updated and find out that there are more and more bitcoin ATMs in your location.

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The Future Of Economic And Workforce Development

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Our economic attention currently is fixed on national policy, with growing risks from a debt limit deadlock and debates over inflation versus recession. But economic prosperity also depends on state, regional, and local policy, and now there’s a free guide to some of the best thinking in the field in the newest edition of the Economic Development Quarterly (EDQ).

EDQ is a leading journal overseen by the W.E. Upjohn Institute for Employment Research. It brings together practitioners and scholars through “supporting evidence-based economic development and workforce development policy, programs, and practice in the United States.” (I’m a member of the editorial board, and also a contributor to this new issue.).

The new issue asked experts associated with the journal “what are the key research and policy questions facing economic development and workforce development today?” In order to reach a broad audience, including policy makers, academics, journalists, and the public, the issue is free for a limited time.

There are 15 articles in the issue, and their range and excellence make it impossible to summarize them. Some focus on companies and firms, including how entrepreneurs can be included in economic development, what policies and programs are most effective in supporting businesses and job creation. Other analyze how public economic development and workforce professionals in the field can be most effective in our complex and tangled systems.

Several articles examine changing workforce dynamics. How can policy engage with macro trends like globalization, high housing costs, and changes in commuting and working from home? Can greater inclusion for the workforce be part of an effective economic development strategy? What would economic development look like if it paid more attention to environmental, racial equity, and family and household issues?

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My contribution draws on my new book, Unequal Cities: Overcoming Anti-Urban Bias to Reduce Inequality in the United States. The book outlines how America depends on cities for innovation, growth, and productivity, but also how our political systems—regional, state, and national—are biased against cities.

That pervasive bias holds down both regional and national productivity and growth. And it perpetuates racially stratified inequality in jobs, economic growth, housing, and education.

Wealthy (and predominantly white) suburbs capture the lion’s share of urban economic growth while not paying their fair share of the costs. That ongoing and structural racial bias is perpetuated over time by our public policies and fragmented metropolitan governments. This in turn makes it very hard for cities to address these problems on their own.

I argue that hyper-mathematized models in urban economics divert energy from more empirical engagement on our economic and workforce problems. We need multi-disciplinary analysis of policy, with special attention to how seemingly neutral policies generate racial and other forms of inequality. And we must recognize how our metropolitan fragmentation and segregation hold back shared economic prosperity.

Although there’s a wide range of policy viewpoints in the EDQ issue, all of the authors use research and analysis to help improve the places where we live. That distinguishes this work from much of mainstream urban economics, which is skeptical of place-based policies. Standard urban economics favors individually-based approaches emphasizing education and skills, and encouraging mobility by companies and people.

Of course, education and skill development are essential components of sound policy, and several of the EDQ articles suggest how to improve it. But in the real economy, experts like those at the Economic Policy Institute show our policy bias towards individualized and company-focused approaches hasn’t led to shared prosperity.

Instead, as watchdog analysts like Good Jobs First point out, we far too often see wasted tax subsidies going to firms that don’t need them, without good jobs and other benefits that were promised in return for the tax breaks. Public education mirrors the unequal fragmentation of regional governments, with suburbs creating better education from their higher property tax bases and wealth while core cities struggle to generate adequate educational funding.

So if you’re interested in economic and workforce development, national and regional and city prosperity, and how equity and growth can be combined in public policy, get your free issue of Economic Development Quarterly. I’m proud to be in such distinguished company, and there’s a lot to learn from them.

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What To Expect From Altria’s Q4?

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Altria (NYSE: MO) is scheduled to report its Q4 2022 results on Thursday, January 26. We expect MO stock to see little movement, with its revenue and earnings aligning with the street expectations. Although the company should continue to see a decline in cigarette volume, given the declining market and higher inflation, pricing growth will likely help offset the revenue loss from volume. While we expect little movement in MO stock based on its Q4 results, it has more room for growth from a valuation perspective, as discussed below. Our interactive dashboard analysis of Altria Earnings Preview has additional details.

(1) Revenues expected to align with the consensus estimates

  • Trefis estimates Altria’s Q4 2022 revenues to be around $5.2 billion, reflecting a low single-digit y-o-y rise and in line with the $5.2 billion consensus estimate.
  • Altria sells its tobacco products in the U.S. Revenue is generated from selling cigarettes, oral tobacco, and smokeless products.
  • While the company is expected to see continued pricing growth, lower volume/mix will likely weigh on its top-line growth.
  • Looking at Q3 2022, the company reported net revenue of $5.4 billion, marking a 2% decline over the prior-year quarter.
  • The decline in revenue can be attributed to lower cigarette volume (down 9%) and the sale of its wine business in October 2021.
  • Our dashboard on Altria Revenues has details on the company’s segments.

(2) EPS likely to be in line with the consensus estimates

  • Altria’s Q4 2022 adjusted earnings per share (EPS) is expected to be $1.17 per Trefis analysis, aligning with the consensus estimate. This compares with the $1.07 figure the company reported in the prior-year quarter.
  • The company’s net income of $2.3 billion in Q3 2022 reflected a modest rise from the $2.3 billion figure seen in the prior-year quarter due to a 90 bps y-o-y rise in operating margin to 58.9%.
  • For the full-year 2023, we expect the adjusted EPS to be higher at $5.11 compared to the EPS of $4.61 in 2021 and an estimated $4.83 in 2022.

(3) MO stock looks like it has some more room for growth

  • We estimate Altria’s Valuation to be around $52 per share, which is 16% above the current market price of $45.
  • At its current levels, MO stock is trading at a little under 9x forward EPS estimate of $5.11 in 2023, compared to the last three-year average of about 10x, implying that it has some room for growth.
  • If the company reports upbeat Q4 results and provides a 2023 outlook better than the street estimates, the P/E multiple will likely be revised upward, resulting in higher levels for MO stock.

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While MO stock looks like it has some room for growth, it is helpful to see how Altria’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities, which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for Ecolab vs. Philip Morris.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Invest with Trefis Market-Beating Portfolios

See all Trefis Price Estimates

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