Billionaire hedge fund manager David Einhorn has a reputation for making his firm's investments public knowledge. After he initiates a buy, he wants Wall Street to know why.
But the question that investors should be asking is "when."
Because 13F filings from Einhorn's firm, Greenlight Capital, are delayed by months, there's a question of whether it's too late to buy by the time Greenlight's buy list gets released for public consumption. The good news is that research shows that applying a lag to institutional holdings can generate positive alpha in some cases. Translation: It's not automatically too late to buy Einhorn's favorite stocks -- as long as you use the right timing tools.
To do that, we're turning to the charts for a look at six of Greenlight Capital's favorite stocks that are breaking out.
First, a quick note on the technical toolbox we're using here: Technical analysis is a study of the market itself. Since the market is ultimately the only mechanism that determines a stock's price, technical analysis is a valuable tool even in the roughest of trading conditions. Technical charts are used every day by proprietary trading floors, Wall Street's biggest financial firms, and individual investors to get an edge on the market.
Without further ado, here's a technical look at some of Einhorn's favorite stocks for 2016.
Community Health Systems
Up first is Community Health Systems(CYH) - Get Report . This stock has been utterly pummeled in the last year, shedding more than 75% of its market value in those trailing 12 months. But Greenlight's timing looks pretty good on Community Health right now. This stock is looking "bottomy" in the long-term thanks to a textbook reversal setup.
Community Health Systems is forming a double bottom, a reversal pattern that looks just like it sounds. The buy signal comes on a push through resistance up at $17.50. Wait for that $17.50 line in the sand to get taken out before you jump into this stock.
Things are pretty straightforward in shares of small-cap satellite communications stock Globalstar(GSAT) - Get Report . Since this stock bottomed back in late February, it's been bouncing its way higher in a well-defined uptrending channel. And as shares correct following a short squeeze earlier this month, buyers are coming up on another buying opportunity as GSAT tests support.
The 50-day moving average has been acting like a good proxy for support since the middle of March. That makes it a logical place to park a protective stop if you decide to buy the next bounce in Globalstar.
It's been pretty hard to ignore the price trajectory in shares of mid-cap outdoor advertising stock Lamar Advertising(LAMR) - Get Report in 2016. Since the calendar flipped to January, this $6 billion ad stock has risen 11% on a total returns basis. But shares could be headed even higher from here thanks to a classic bullish continuation pattern that's been forming in shares in May.
Lamar is forming an ascending triangle pattern with resistance up at $65. Put simply, if this stock can muster the strength to break above $65, then shares are likely to kick off another up-move. As of this writing Lamar is trading within a couple of points of that level - when the breakout happens, the 50-day moving average looks like a logical place to park a protective stop.
Einhorn's big bet on Yelp(YELP) - Get Report is getting attention this week -- and it should be. Yelp is in rebound-mode right now, and shares could be in store for a re-test of last December's highs this summer.
Yelp is forming a short-term ascending triangle setup, in this case with a breakout level at $26.50. Put simply, if buyers can muster the strength to get this stock trading back above $26.50 for the first time since January, we've got a clear signal that buyers are finally back in control of this stock. And shares are hovering just below that $26.50 price ceiling heading into the short Memorial Day week. From there, prior resistance at $31 looks like the next potential stumbling block for Yelp.
American Capital Agency
Mid-cap mortgage REIT American Capital Agency (AGNC) - Get Report is another textbook ascending triangle trade that investors should be plucking off of Einhorn's buy list this summer. American Capital has been another stellar performer year-to-date, handing investors total returns of 15% since the calendar flipped to January.
For American Capital, the big breakout level to watch is resistance up at $19. If shares can hold a bid above that $19 line in the sand, there's a pretty clear-cut buy signal in this high-yield stock.
Yahoo! (YHOO) continues to grab the headlines in 2016, as the firm works to sell itself off. But in the meantime, investors should be paying a little more attention to Yahoo!'s stock chart. That's because this stock's price setup has evolved into a sideways trading range, a classic "if/then trade." Put simply, if Yahoo! can clear resistance up at $38, then higher ground becomes likely. Otherwise, if shares materially violate support at $36, then Yahoo opens up a lot of downside risk.
Bear in mind that headline risk is still pretty high in this stock: Yahoo!'s selling off its core business, and any surprise news is going to move the stock. That said, Yahoo!'s tight trading range looks like a solid opportunity for traders who keep their stops tight. Yahoo started the week looking "toppy," but the last few sessions' price action reversed that. Since Yahoo!'s trend leading up to its price channel was bullish, Yahoo! is favoring a breakout through $38.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.