David Einhorn (Trades, Portfolio), the founder and president of Greenlight Capital, has revealed a medium-sized position in agricultural machinery company CNH Industrial (CNH, Financial). This announcement led to CNH Industrial's shares surging over 8% in post-market trading. However, the stock has fallen nearly 14% this year, underperforming the broader U.S. stock market.
Einhorn highlighted that CNH Industrial is an overlooked value investment as the agricultural machinery sector approaches the end of a bear market cycle. He emphasized that the company is currently undervalued despite a lack of positive news in the foreseeable future. Low agricultural commodity prices and a declining equipment cycle have contributed to the current situation.
CNH Industrial offers a dividend yield of over 4% and is actively buying back shares, all with minimal financial leverage. Einhorn suggests that by next year, or possibly early 2026, investors might start to consider the potential earnings of the stock at the peak of an economic cycle.
The renowned investor believes that demand will rebound as outdated equipment eventually requires replacement. He notes that the agricultural equipment market has experienced a cyclical downturn following a period of high purchasing. As the cycle concludes, the market may be operating 20% below average this year, with potential to rise 20% above average in three to four years, reflecting the nature of these businesses.
