CNX Resources (CNX): Longleaf Loves This Natural Gas Company

Longleaf Partners Fund, a suite of mutual funds and UCITS funds managed by Southeastern Asset Management, discussed CNX Resources Corp. (NYSE: CNX) in its most recent letter to investors. CNX, a Pittsburgh-based natural gas company, did not perform well on the share market in 2018. Let’s take a look at the fund’s comments on CNX:

CNX (-22%, -1.35%, -20%, -1.30%), the Appalachian natural gas company, detracted for the year. The stock declined after reporting an 8.5% increase in capital expenditure guidance during the second quarter.

Additionally, nearly all energy stocks had a sharp selloff following the fourth quarter’s commodity price volatility. CEO Nick DeIuliis took advantage of the dislocation by repurchasing over 16% of CNX’s outstanding shares in the 12 months ended in October. Our appraisal increased with the company’s growth in cash flow.

In June, CNX sold its Ohio Utica acreage for a good price. The company has other non-core assets to monetize in coming years. Most production is hedged several years out, helping to insulate the business’s value from declines in the gas strip. The stock trades at below half of our appraisal.

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CNX Resources Corp. (NYSE: CNX) is one of the largest independent natural gas exploration, development, and production companies, focusing on the major shale formations of the Appalachian Basin.

Shares of the company fell over 24% in 2018. Since the start of the year, the stock has dropped over 10%. Closing at $10.47 on Monday, the stock has a consensus average rating of ‘HOLD’ and a consensus average price target of $15.60, according to analysts polled by FactSet.

If we look at hedge funds sentiment, CNX isn’t a very popular stock among hedge funds tracked by us. At the end of the third quarter of 2018, 23 funds held the stock in their portfolios.