5 Small-Cap Stocks to Buy According to David Einhorn’s Greenlight Capital

2. CONSOL Energy Inc. (NYSE:CEIX)

Greenlight Capital’s Stake Value: $55,137,000

Percentage of Greenlight Capital’s 13F Portfolio: 3.69%

Number of Hedge Fund Holders: 15

Market Capitalization as of December 4: $745.462 million

CONSOL Energy Inc. (NYSE:CEIX), an American energy company focused on coal mining and natural gas, represents 3.69% of Greenlight Capital’s Q3 portfolio. The hedge fund holds 2.11 million shares in CONSOL Energy Inc. (NYSE:CEIX) as of September this year, worth $55.1 million. Einhorn reduced his stake in the company by 3% in Q3. 

On November 2, CONSOL Energy Inc. (NYSE:CEIX) announced its Q3 results, posting an EPS of -$0.14, missing estimates by -$0.78. The quarterly revenue totaled $149.01 million, down 38.73% from the prior-year quarter, missing estimates by $157.04 million. 

Riley analyst Lucas Pipes on October 4 raised the price target on CONSOL Energy Inc. (NYSE:CEIX) to $35 from $24 and kept a Buy rating on the shares, citing rising gas prices in the international markets. 

Todd J. Kantor’s Encompass Capital Advisors is one of the leading stakeholders of the company, with 568,581 shares worth $14.79 million. Overall, 15 hedge funds in the third quarter were bullish on CONSOL Energy Inc. (NYSE:CEIX), up from 13 funds in the prior quarter. 

Here is what Greenlight Capital has to say about CONSOL Energy Inc. (NYSE:CEIX) in its Q2 2021 investor letter:

“Thermal Coal and Natural Gas

ESG investing is inflationary, as green energy is simply more expensive than hydrocarbons. Hydrocarbon energy companies are starved for capital and are being told to change their ways. The result is less exploration and drilling. Even with benchmark oil prices surging over the last year, companies are loath to drill more. Normally, the cure for high prices is high prices. With ESG in the proverbial driver’s seat, we might need much higher prices still in order to increase investment to meet demand.

There is almost nothing less popular than thermal coal. From 2011 to 2020, U.S. coal production declined by 51%. U.S. demand has fallen as we’ve shifted to alternative sources of electricity. As unpopular as coal is though, it still makes up about 20% of U.S. electricity generation. Globally, coal demand is growing modestly as China and India add power generation capacity faster than the West is reducing it. Even so, reduced oil and gas drilling has caused natural gas prices to advance and coal prices are following. Seaborne thermal coal prices are up 140% year-over-year and at the highest levels since 2011, and Northern Appalachia thermal coal prices are catching up, rising 23% in the last month alone.

We own CONSOL Energy (CEIX), the lowest cost, most efficient miner in Appalachia, which is poised to benefit from rising coal prices. It trades at 12x consensus earnings estimates that look stale to us, as they do not reflect recent coal price gains.”