Speaking at the Robin Hood Investors Conference on Monday in New York, David Einhorn, a hedge fund manager and founder of Greenlight Capital, talked about the survival of Consol Energy.
Consol Energy is coal and natural gas production company that has seen a 77% loss in value since the beginning of the year.
Einhorn is a major shareholder of the firm and argued the energy company is here to stay, calling it his “best idea.” After his speech Monday, stock value for the company increased by 8.7% in the pre-market.
Einhorn first became involved with the company by purchasing stocks in 2014. Since then he has increased his holdings which could be seen as surprising given that Einhorn has cut his stakes in other underperforming companies, such as SunEdison and Micron, this year.
He says he believes the company can hold on citing that come 2018 they will be able to invest in new projects and in the meantime they’re able to wait.
This is good news for Consol Energy who have had worst-performing stock in the S&P 500
over the past 6 months. The performance mirrors some of the worst performer in the hard-hit Alberta oil patch.
Einhorn’s commitment to the company remains strong and he continues to talk it up and, according to recent rises after his conference speech, it seems to be working.
The company is said to also have been transferring more assets over from coal to natural gas, which could mean growth in earnings in the long-term. At least 20 coal companies have gone into liquidation over the last few years as the demand for it continues to lessen, and so a transfer to more natural gas projects is perhaps a wise move.
Having been in the mining industry for 150 years, coal was Consul’s main gig but its ownership of natural gas could be its saving grace here. Einhorn pointed out that the company needed to wait until the right time to make its new investments in the area of shale gas but emphasises its management is disciplined enough to do so and is looking at the potential profitability in the long-run.