David Einhorn speaking in New York City on April 3, 2024.
Adam Jeffery | CNBC
Greenlight Capital’s David Einhorn said Wednesday he has taken a medium-sized position in agricultural play CNH Industrial.
Speaking at CNBC’s Delivering Alpha conference in New York City, the hedge fund investor said the agricultural machinery company is an under-the-radar value play as the industry nears the end of a bearish cycle.
“It’s exactly the kind of situation that absolutely nobody cares about right now because it’s cheap, and the news over the next period of time isn’t going to be very good. Agriculture prices are low, and agricultural equipment is ending down cycle,” Einhorn said at a panel with CNBC’s Leslie Picker.
Shares of CNH popped more than 4% in extended trading following his comments.
CNH Industrial, YTD
Einhorn noted that CNH, formerly Case New Holland, is a hefty dividend payer with an over 4% yield, while the firm is actively buying back stock.
“There’s very little financial leverage. And sometime next year, maybe even in early 2026…. people will begin envisioning a couple dollars earnings on the top cycle,” Einhorn said.
The high-profile investor believes that demand is poised to return as aging equipment eventually needs to be replaced.
“You had a period where you had a bit of a boom in agriculture equipment purchases, and now that’s turned into a cyclical bust. These things come and they go,” Einhorn said. “This year, the ag equipment universe is probably 20% below its average at the end of the whole recycle. And sometime three or four years from now, it’ll probably be 20% above. Just the nature of how these businesses work.”
The industrial stock has significantly underperformed the market this year, down more than 17%.
