The manager of a well-known US hedge fund has placed a significant bet on an Italian stock, stating confidently: “It can double its value.”
At a time when traders are anxious about the impact of the new Donald Trump administration on global markets, this billionaire investor—one of the most influential voices on Wall Street—has chosen to invest in a group whose shares have been under pressure for some time.
The Wall Street guru in question is the founder of a hedge fund, established in 1996, described as a “long-short value-oriented hedge fund.”
The Hedge Fund’s Bet on the Stock
A long-short value-oriented hedge fund is a type of speculative investment vehicle—sometimes structured as an ETF—that takes both long and short positions on stocks.
These funds often employ advanced investment techniques, including leverage, derivative contracts, and short selling. While primarily used by hedge funds, these strategies are also occasionally adopted by investment funds and ETFs.
Now to the bullish call on the stock: the investor is none other than David M. Einhorn, founder and president of Greenlight Capital, the hedge fund he established in 1996.
Einhorn has picked CNH Industrial, the Italian-American multinational that manufactures agricultural and construction machinery, buses, and specialty vehicles. After delisting from the FTSE MIB of Piazza Affari earlier this year, CNH Industrial is now traded on the NYSE and Euronext Global Equity Market.
“The shares can double over the next two years,” Einhorn said at the CNBC Delivering Alpha Conference.
Einhorn described CNH Industrial as “a stock that no one cares about at the moment,” emphasizing that it is “cheap.” He also pointed out that CNH offers attractive dividends, boasting a dividend yield of over 4%, alongside an active share buyback program.
CNH Industrial’s Recent Performance and Earnings
CNH Industrial’s shares have faced significant challenges in 2024. Over the last five trading sessions, the stock fell more than 13% and is down over 17% year-to-date. In the past month alone, it has lost over 9% of its value.
Headquartered in Amsterdam with tax domicile in London, CNH Industrial is part of the Exor group, the holding company of the Agnelli-Elkann family that also includes Stellantis, Juventus, and Ferrari.
Recent updates from CNH Industrial have been far from encouraging. The tractor giant reported a 43% year-on-year drop in net profit in Q3 2024, down to $310 million, with revenues falling 22% to $4.654 billion—both figures missed analysts’ expectations. The company also cut its full-year 2024 earnings guidance, leading to a sharp sell-off in its stock.
Why Einhorn Sees Value in CNH
Despite the disappointing earnings, Einhorn views CNH Industrial as a bargain. The stock’s dramatic decline has made it, in his words, an undervalued opportunity with the potential for substantial returns.
Original article published on Money.it Italy 2024-11-14 12:22:31. Original title: Questo titolo italiano è “economico”. Hedge fund USA piazza una grande scommessa
