David Einhorn has posted his slides from The Robin Hood Conference on the bullish case for Consol Energy as we covered here. See the full slides from David Einhorn below.
And this is the graph of CONSOL, an energy company that has gone from $40 to $7. Again, we timed it poorly, initially buying in the 30s and adding all the way down.
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Source: Bloomberg LP as of November 13, 2015.
CONSOL is at $7.40 a share, giving it a $1.7 billion market cap, and a $5.5 billion enterprise value.
Source: CNX filings available at http://phx.corporate?ir.net/phoenix.zhtml?c=66439&p=irol?sec; Bloomberg LP pricing as of November 13, 2015; and Greenlight calculations. Minority interest is based on the publically traded value of CNX Coal Resources LP (CNXC) not owned by CNX as of November 2015.
The market views CONSOL as a coal company. We disagree, but let's look at it through that lens for a moment.
[drizzle]These are coal stocks, and among them CONSOL is not an outlier.
As you can see, the whole industry has practically been left for dead. Even CONSOL’s bonds trade like it might go out of business.
Source: Greenlight calculations based on pricing data from Bloomberg LP as of November 13, 2015. Comparative coal companies selected in the sole discretion of Greenlight.
A decade ago, coal was used to generate roughly half of all electricity in the U.S.
Source: Greenlight calculations using U.S. Energy Information Administration (“EIA”) monthly U.S. electricity generation data, filtered on the electric power sector, retrieved November 2015, from EIA’s custom table builder at www.eia.gov/forecasts/steo/query. Classifications selected in the sole discretion of Greenlight.
Thanks to the shale gas revolution and environmental regulations, coal is no longer king. We burn less of it and its price has declined.
Source: Source: Platts Coal, obtained November 2015.
While coal used to provide nearly half of U.S. electricity, it’s now providing less than 35%.
Source: Greenlight calculations using EIA monthly U.S. electricity generation data, filtered on the electric power sector, retrieved November 2015, from EIA’s custom table builder at www.eia.gov/forecasts/steo/query. Figures for 2015 are year to date through September 30, 3015.
Classifications selected in the sole discretion of Greenlight.
We’ve gone from producing more than a billion tons of thermal coal annually to less than 850 million tons in the last five years, and everyone agrees that this trend will continue.
Source: Greenlight calculations using EIA annual U.S. coal supply, consumption, and inventories data, retrieved November 2015, from EIA’s short term energy outlook browser (beta) at www.eia.gov/beta/steo/. Thermal coal is total coal less exported metallurgical coal and coke plant consumption.
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n case you can't read that cartoon, it says, "I suspect my husband's hiking on me.“
We’re going to focus on the coal coming out of Appalachia, an area known for being a favorite hiking spot of South Carolina governors.
Appalachia has been hit especially hard by the falling demand.
In the past few years we’ve seen at least 20 coal companies go into bankruptcy, liquidating their inventories into an already oversupplied market as they do so.
The current spot price is just $43 per ton, down from about $80 four years ago.
[/drizzle]
