Renowned activist investor, David Einhorn of Greenlight Capital has increased his holding in CONSOL Energy Inc. (NYSE:CNX) by a massive 43.8%, according to two recent forms filed with the Securities and Exchange Commission. The current stake comprises 29.61 million shares held indirectly through Greenlight’s affiliated funds, and amasses almost 13% of the $4.04 billion energy company’s outstanding stock.
The New York-based Greenlight Capital has more than $12.3 billion worth of regulatory assets under management. The fund is renowned for its short position on Lehman Brothers before the bank collapsed. According to the fund’s most recent 13F filing, the market value of its public equity portfolio stood at $7.79 billion and 43% of that value was invested in the technology sector.
An everyday investor does not have the time or the required skill-set to carry out an in-depth analysis of equities and identify companies with the best future prospects like a fund with the knowledge and resources of Greenlight can. However, it is also not a good idea to pay the egregiously high fees that investment firms charge for their stock picking expertise. Thus a retail investor is better off to monkey the most popular stock picks among hedge funds by him or herself. But not just any picks mind you. Our research has shown that a portfolio based on hedge funds’ top stock picks (which are invariably comprised entirely of large-cap companies) falls considerably short of a portfolio based on their best small-cap stock picks. The most popular large-cap stocks among hedge funds underperformed the market by an average of seven basis points per month in our back tests whereas the 15 most popular small-cap stock picks among hedge funds outperformed the market by nearly a percentage point per month over the same period between 1999 and 2012. Since officially launching our small-cap strategy in August 2012 it has performed just as predicted, beating the market by over 80 percentage points and returning over 139%, while hedge funds themselves have collectively underperformed the market (read the details here).
Greenlight initiated a stake in CONSOL Energy Inc. (NYSE:CNX) in the third quarter of 2014 and has been adding to the position ever since. The Pennsylvania company, which is also one of the largest natural gas producers in the U.S, has suffered recently owing to lower energy prices and is in the midst of a restructuring program, which revolves around decreasing the company’s exposure to coal. In this regard CONSOL Energy Inc. (NYSE:CNX) recently sold a stake in CNX Coal Resources.