It's always a good idea for individual investors to look at what institutional investors, also called the smart money, are choosing. You should never base your decisions solely on others without doing research, but institutional investors have been professionally trained, and they often have decades of experience and the returns to back it up.

Following these successful investors is also a good way to find new ideas and check your thesis. Still, too often, I feel like individuals are only looking at two or three of the best investors instead of casting a wider net.

Warren Buffett and Bill Ackman certainly come to mind. I have nothing against Buffett or Ackman, who are certainly two of the best ever, but here's the billionaire I think people should be following.

A strong record despite fundamental shifts

David Einhorn manages hedge fund Greenlight Capital, which he launched at the age of 27 after raising about $900,000 from family and friends. Einhorn rose to prominence from betting against -- or short-selling -- Allied Capital in 2002 when he questioned the company's accounting practices.

Years after he announced his short position, the Securities and Exchange Commission validated Einhorn's thesis, finding that Allied did indeed break securities laws due to its accounting practices.

Einhorn also played a key role during the Great Recession when he shorted Lehman Brothers in 2007 due to the company's underwater securities holdings.

But like many of the greats, Einhorn also is known for his value investing approach, in which he looks for stocks trading below their intrinsic value. Earlier this year, he said that he believes the practice of value investing might be dead due to the broken market structure and the rise of passive investing:

This shift in market structure has led him to change his investing philosophy for his larger company holdings. Now, he focuses on companies that look cheap in value and return capital to shareholders through repurchases or dividends. It's always a good sign to see even the best investors adapt, even though Einhorn is probably frustrated by this shift in market structure.

Despite changing his strategy, he has generated strong long-term returns. Greenlight has average annual returns of 13.1% since its launch in 1996, compared to 9.5% for the broader benchmark S&P 500. That equates to a total return of over 2,900% compared to the S&P 500's 1,117%.

Einhorn's big winner

The largest position in Greenlight's portfolio is a homebuilding company called Green Brick Partners (NYSE: GRBK). He founded Green Brick in 2006 with experienced real estate investor and homebuilder Jim Brickman.

In 2008, amid the housing market collapse, Einhorn and Brickman started a real estate equity fund, where they initially began buying land and lending to distressed builders. By 2013, the housing market had bounced back and their fund had amassed a lot of land. Needing capital to grow, the two took the fund public, and it became Green Brick Partners. Brickman became chief executive officer and Einhorn became chairman of the board.

Greenlight Capital began purchasing Green Brick shares in the fourth quarter of 2014 at an average price of $7.20. Its first purchases amounted to roughly $112 million. While Greenlight has been in and out of the stock over the years, the position is currently valued at about $950 million.

Einhorn and Greenlight still owned more than 25% of its shares, according to Green Brick's most recent proxy. The stock has almost doubled in the past year and is up more than 670% during the past five years.

All of those land purchases since 2006 have been a differentiator for Green Brick in the homebuilding business. At the end of the second quarter of 2024, it owned more than 28,500 lots, most of which are in the growing market of Texas. As inventory and land have become more limited and competitive to acquire, especially in strong and desirable housing markets, this strategy has paid off handsomely.

A value investor with plenty of runway

When I look at Einhorn's current holdings, I see that he still owns plenty of value stocks, which I always find to be the most interesting to evaluate because they trade at attractive valuations and their futures depend on their ability to pay down debt, generate cash flow, and transform the trajectory of their earnings.

However, Einhorn is cognizant of changing market dynamics and is willing to adapt, an important characteristic for any investor. At just 55 years old, he has plenty of runway left in his investing career, I believe, and is a smart person with a unique viewpoint that individual investors should watch and study.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Green Brick Partners. The Motley Fool has a disclosure policy.

Here's the Billionaire Investor You Should Be Following -- and He's Not Warren Buffett or Bill Ackman was originally published by The Motley Fool