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Einhorn at Sohn Investment Conference: Short Core Laboratories

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David Einhorn at the 2017 Sohn Investment Conference

David Einhorn, billionaire investor and president of Greenlight Capital, shared his investment picks at the 2017 Sohn Investment Conference. The hedge fund manager is well known for his investment strategy. Last year at the same conference, he said he was short on a bag of US oil drillers. He was also short on Pioneer Natural Resources (PXD).

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Einhorn’s investment pick

At the conference on Monday, May 8, 2017, Einhorn said he is short on oil and gas servicing company Core Laboratories (CLB). After the conference, CLB stock fell nearly 2.3%. Einhorn said, “Core’s earnings will disappoint over the next few years. Core’s business is not a secular growth story.”

As the company has huge exposure to offshore, it needs a V-shaped recovery in crude oil prices (USO) (UCO) (OIIL). However, we’re seeing that crude oil prices are trading within a narrow range of $52–$48 per barrel. Oil recovered nearly 95.0% from its low of $26.11 on February 11, 2016. A further upside movement in crude oil prices (DBO) depends on many fundamental factors. Einhorn said, “We don’t believe there is a V shaped recovery on oil prices.”

Einhorn believes the company will miss analysts’ estimated earnings and revenues in the upcoming quarters. He’s expecting a 45.0% downside for the stock. CLB stock has returned nearly -12.0% on a year-to-date basis. It returned nearly -17.0% over a two-year period.

In the next part of this series, we’ll analyze Gundlach’s view on the current market scenario.

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