David Einhorn's Q1 2025 Portfolio Shifts: A Contrarian Bet on Natural Resources and Value Plays

David Einhorn, the contrarian icon behind Greenlight Capital, has once again demonstrated his knack for spotting mispricings and capitalizing on sector rotations. In Q1 2025, his portfolio shifted decisively toward natural resources, discount retail, and value-driven sectors, while shedding positions in overvalued or cyclical industries. This strategic reallocation underscores a disciplined focus on undervalued assets with structural tailwinds, offering investors a playbook for navigating an uncertain macroeconomic landscape.

The Natural Resources Pivot: CNR and TECK Lead the Charge

Einhorn's largest bets this quarter centered on Core Natural Resources (CNR) and Teck Resources (TECK). Greenlight increased its CNR stake by 58.37%, adding 814,000 shares valued at $170 million, while boosting TECK holdings by 84.05% to $73 million. Both companies operate in sectors facing supply-demand imbalances—CNR in coal and copper, and TECK in zinc, copper, and steelmaking coal.

The rationale is clear: commodities are back. Rising global infrastructure spending, energy transition demands for base metals, and geopolitical supply disruptions have created a “supercycle” for natural resources. CNR and TECK's low valuations—P/E ratios of 7.2x and 8.5x, respectively—contrast sharply with their strong free cash flow and dividend histories. Einhorn's moves here reflect a contrarian bet that markets have yet to fully price in these fundamentals.

Discount Retail as a Defensive Play: DLTR's Value Proposition

Einhorn also initiated a $33 million position in Dollar Tree (DLTR), a 1.66% allocation to his portfolio. The discount retailer thrives in environments where consumers prioritize affordability—a trend likely to persist amid rising inflation and economic uncertainty. DLTR's 14.2x P/E and 2.8% dividend yield stand out in a retail sector where peers like Walmart and Target face margin pressures.

This move aligns with sector rotation principles: shifting capital from high-growth, valuation-sensitive sectors (e.g., tech, fitness) to defensive, cash-generative businesses. DLTR's same-store sales growth of 4.1% in Q1 2025, despite broader retail headwinds, reinforces its resilience.

Exiting Overvalued and Cyclical Plays: PTON and CNH

Conversely, Einhorn reduced holdings in Peloton (PTON) and CNH Industrial (CNH) by 52.45% and 21.09%, respectively. These exits highlight skepticism toward overhyped sectors and economic cyclicality:

• PTON: Once a symbol of the “stay-at-home economy,” Peloton has struggled with declining demand, liquidity issues, and a P/S ratio of 0.4x, far below its 2021 peak. Einhorn's exit signals a loss of faith in its ability to recover margins in a post-pandemic world.
• CNH: The industrial equipment maker's reduced stake reflects concerns about global manufacturing slowdowns and valuation multiples. CNH's EV/EBITDA of 7.8x may no longer justify its exposure to cyclical demand.

Why Einhorn's Strategy Matters for Investors

Einhorn's Q1 moves are a masterclass in contrarian value investing:
1. Sector Rotation: Shifting capital to commodities and discount retail positions him to profit from supply-side constraints and consumer resilience.
2. Mispricing Arbitrage: CNR and TECK trade at discounts to their intrinsic value, while DLTR offers a high-quality defensive play.
3. Risk Management: Exiting overvalued or cyclical names like PTON and CNH reduces exposure to downside risks in volatile markets.

Investors should take note: undervalued, cash-generative businesses in overlooked sectors are Einhorn's sweet spot. This strategy isn't just about picking stocks—it's about identifying industries where structural advantages (e.g., commodity scarcity, pricing power) outweigh near-term volatility.

Investment Takeaways

• Follow the Contrarian Signal: Consider adding exposure to natural resources via ETFs like the VanEck Vectors Natural Resources ETF (NYSEARCA:PVX) or direct plays like CNR and TECK.
• Discount Retail Resilience: DLTR's model of consistent cash flow and pricing discipline makes it a recession-resistant holding.
• Avoid Overhyped Sectors: Steer clear of names like PTON unless there's clear evidence of margin recovery or strategic pivots.

Einhorn's Q1 portfolio is a reminder that value persists where fundamentals align with macro trends. In an era of geopolitical tension and economic uncertainty, his focus on resilient assets offers a roadmap for investors seeking asymmetric returns.

As always, consult your financial advisor before making investment decisions.