The 2025 Sohn New York Conference is in the books, bringing with it many interesting ideas and lots of exciting commentary. David Einhorn of Greenlight Capital was one of the presenters, and he shared his thesis for the German chemical company Lanxess (ETR:LXS) (OTCMKTS:LNXSY).
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Nothing but bad luck
Einhorn believes company management has made some “excellent strategic decisions” but that Lanxess stock has taken a deep dive due to lots of “bad luck.”
Lanxess was spun out of Bayer in 2004, and Einhorn met Lanxess CEO Matthias Zachert at that time. Zachert left to become the chief financial officer of another company that had a strong run under his leadership. He returned to Lanxess in 2014.
According to Einhorn, the company was “a mess” at the time it was spun out from Bayer, consisting of a hodgepodge of non-core chemical businesses. Greenlight had previously owned Lanxess but sold it in 2010 in the low $40 range, the second most-profitable investment in the firm’s history.
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Transformation
Now 15 years later, Lanxess stock is about one-third lower from where Greenlight sold it. Einhorn noted that the company has certainly not been a compounder.
However, Lanxess has since been transformed via divestitures and acquisitions, making it look totally different from when Greenlight owned it two decades ago. Einhorn said the company unloaded its highly cyclical commodity businesses, replacing them with more stable, higher-quality specialty chemicals in “attractive” global niches.
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