Greenlight Capital’s David Einhorn gave a new investment idea on Wednesday at the Sohn Investment Conference in New York: Lanxess , a German chemical company. “Today, I’m presenting a company where the management has made excellent strategic decisions but the stock has suffered due to a lot of bad luck,” Einhorn said in a cartoon-littered presentation titled “When bad things happen to good people.” The star hedge fund investor noted that Lanxess has shed its highly cyclical commodity businesses and replaced them with more stable, higher-quality specialty chemicals. Lanxess was founded in 2004 after Bayer AG spun off its chemicals division and parts of its polymers business. “In theory, this should have led to more stable returns, higher margins and a higher multiple. In practice, the progress was temporarily derailed by a slew [of] unfortunate developments,” Einhorn said. “The opportunity today is to realize that the troubles have largely passed and that the company is likely to be on a successful path to realizing the benefits of its transformation.” The widely followed investor said Lanxess could be a tariff beneficiary because the company, as a domestic manufacturer, could start to raise prices. Einhorn said almost 30% of its manufacturing capacity is in the U.S., while in some areas, such as parts of its advanced industrial intermediate business unit, it is the sole remaining U.S. producer and faces Chinese competition. “We think Lanxess is set for success and will surprise the market,” Einhorn said. Einhorn famously presented Lehman Brothers as his short idea at the same conference in 2008 before the collapse of the investment bank.
