David Einhorn’s Greenlight Capital Builds Stake in Cairn Energy


David Einhorn's Greenlight Capital Builds Stake in Cairn Energy

Greenlight Capital has disclosed a stake in Cairn Energy PLC  (LON:CNE)  a United Kingdom Energy Oil and Gas Exploration Company. Einhorn’s hedge fund now holds 3.06% of the company, just over the amount that requires regulatory disclosure. The deal seems to have been done at the beginning of February after a return of $3.5bn to shareholders following the sale of a stake in Cairn India to Vendanta Resources PLC (LON:VED) a minerals and mining company that operates out of the UK but whos operations are mainly in India. That stake was reported to have been 40%. After that return went through the share price dropped and Einhorn appears to have bought at this time.

Cairn Energy is divided into two major operations, Capricorn Group and Cairn India. Cairn India mainly deals with operations in and around the subcontinent while Capricorn group concentrates its exploration in the Mediteranean and Greenland. Cairn energy acts as the coordinator at the top level for these two diverse business operations. As of June 2011 Cairn was reporting a group revenue on a contiuning basis of $1.3 billion and a profit after tax of $643 million. The company drilled five wells off of the coast of Greenland in the summer of 2011 and is operating 11 blocks there. The company is responsible for more than 40 finds of oil and gas in Southern Asia through its subsidiary Cairn India.The company maintains a 22% holding in Capricorn India after that subsidiary’s IPO and the sale to Vendanta. The company’s low value in the direct wake of that trade seems to have been Einhorn’s motive in purchasing the stock.

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David Einhorn is known for being a member on the boards of many diverse charities. His Greenlight Capital, where he serves as President has generated 30% gross returns on an annual basis. He is also known for basing his investments on a larger more detailed analysis rather than simply using the value of the stock and its price to decide. He has said he does not invest unless he has a theory explaining why the stock in underpriced. Greenlight Capital holds interests in firms from many sector including Dell, Delphi Automotive, who have also had investments from the likes of George Soros, and Apple. All three of these interests are recent aquisitions of the hedge fund. The fund also placed a risky investment in Research in Motion, the struggling Canadian telecommunications company, in the last quarter.