Hedge fund manager David Einhorn told investors that he thinks performance chemicals company Chemours (CC) will see its earnings grow as prices for titanium dioxide (TiO2), used in the food and cosmetic industries, recover.
Einhorn’s comments, in a letter sent to Greenlight Capital investors on Tuesday morning and seen by Reuters, helped the company’s stock price climb 6.1% to $9.33.
“We expect the stock to appreciate as investors refocus on the earnings power of the business, which we think will approach $2.00 in 2017,” the letter said.
The hedge fund sees room for cost cuts at Chemours, which was spun off from DuPont (DD) a year ago, Greenlight wrote.
In June the company’s stock price was pushed lower when prominent short-seller Andrew Left published a report that said the company was “set up for bankruptcy” due to legal issues associated with a discontinued product.
Greenlight said it engaged outside experts who estimate that Chemours‘ debt and legal liabilities are manageable.
The dip in the stock price helped the hedge fund buy more of the stock after it first began investing in late 2015 when it thought titanium dioxide prices were at or near the bottom. Greenlight bought its stake at an average $6.58.