Hedge Funds Divided On These Sliding Stocks

Wall Street has not greeted the decision of Peabody Energy Corporation (NYSE:BTU)’s shareholders to undergo a reverse stock split kindly, with shares slumping by 9.49% in early afternoon trading. The decision was approved during a special shareholder meeting on Wednesday, with the 1-for-15 reverse split set to come into effect at the end of the September 30 business day. The move will see the total number of outstanding shares to decrease from about 278 million to approximately 19 million. Peabody has announced that no new shares will be issued and that shareholders with fractional shares would be compensated in cash.

“We thank our shareholders for their continued support as we work through these challenging times. Peabody is advancing further initiatives across our global platform with an intense focus on operational excellence, lean organization, portfolio management and financial strength,” said President and Chief Executive Officer Glenn Kellow.

Peabody Energy Corporation (NYSE:BTU), on the other hand, gained in popularity among the hedge funds within our database during the second quarter, with the number of investors increasing to 27 from 19, although the overall value of their stakes fell to $142 million from $226 million, which is not actually a result of funds selling shares, but due to the sheer decline of the stock, which fell by more than 55% during the second quarter. Famous activist Dmitry Balyasny is the biggest fan of the stock, as his fund Balyasny Asset Management holds a little over 18.4 million shares as of the end of the second quarter, though this was down by 33% over the quarter. Robert Pitts on the other hand, decided to enter into a long position during the quarter, amassing some 8.94 million shares, as reported in his fund’s latest 13F filing. Ken Griffin is also optimistic about the prospects of Peabody Energy, with Citadel Investment Group reporting a 14% increase in its stake to 3.09 million shares.

Disclosure: None