Einhorn pounds the table on the worst S&P stock

Shares of Consol Energy surged nearly 8 percent Monday, apparently getting a boost from hedge fund manager David Einhorn's bullish commentary about the name.

At the Robin Hood Investors Conference in New York, Greenlight Capital's Einhorn gave a speech calling his current "best idea" Consol Energy. Those shares consequently jumped in early trading, opening much higher and rising throughout the day.

The stock move may be a bit odd, given that Einhorn's enthusiasm for the name is no secret. The famous fund manager first took a stake in the company in the third quarter of 2014, and has steadily increased his holdings since then, including in the most recent quarter.

Meanwhile, the shares have fallen dramatically. Actually, Consol is the worst-performing stock in the S&P 500 over the past six months and the past year. So while the paperwork does not tell investors precisely when Einhorn got in, even if his fund bought the stock at the single lowest tick seen in the quarter, he has still watched it drop by 75 percent. This as coal, natural gas and oil prices have been creamed.

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But Erin Gibbs, equity chief investment officer of S&P Investment Advisory Services, finds reason to agree with Einhorn's current take on the company.

"They've really been diversifying themselves — getting out of their coal assets [and] transferring over more into natural gas, and they hedge over 55 percent of their natural gas exposure," Gibbs said in a Monday "Trading Nation" segment.

Given that Consol is expected to see earnings growth of 40 percent and 60 percent in the next two years, respectively, "we really do see this as a transition, turnaround company with some potential," Gibbs said.


David Einhorn, founder of Greenlight Capital.
Adam Jeffery | CNBC
David Einhorn, founder of Greenlight Capital.

Of course, anyone looking at a chart is likely to see a different story playing out.

"If this stock looks like this in the sixth year of a broad market advance, what's it going to look like when the cycle ultimately turns?" Oppenheimer technical analyst Ari Wald inquires rhetorically.

Wald sees the stock falling as low as $5, which would represent a further drop of nearly 40 percent.

Meanwhile, investors should expect to see Einhorn's full take on the stock late Tuesday, when Greenlight Capital will release the Monday presentation he gave, the fund's chief operating officer told CNBC.

In other Einhorn news, a Monday regulatory filing revealed that the poker-playing fund manager cut his stakes in SunEdison and Micron in the third quarter. Like Consol, both stocks have seen painful drops over the past year. He also boosted his position in shares of Apple, in part by using bullish call options.

Disclosure: CNBC is a media partner of the Robin Hood Investors Conference.

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Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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