David Einhorn Channels His Inner Warren Buffett and Carl Icahn

Activist investor, Carl Icahn, made a splash when he took on Chesapeake Energy (NYSE: CHK  ) and won. Warren Buffett's Berkshire Hathaway (NYSE: BRK-B  ) is another company that's been investing in the energy space, though Buffett uses different tactics. Now, David Einhorn has entered the fray with stakes in BP (NYSE: BP  ) and Anadarko Petroleum (NYSE: APC  ) .

The good fight
Chesapeake got into trouble when former CEO and co-founder, Aubrey McClendon, went on a national spending spree when natural gas prices were high. As the price of natural gas plummeted to all time lows, the company's debt-heavy, land-driven model stopped working. That's when Icahn called for change.

The activist investor was the clear winner after ousting McClendon and installing a new CEO. The new model was to sell off less desirable assets to pay down debt and refocus around drilling on land Chesapeake owned. That hasn't been an easy process, but the company's shares are up over 45% from their mid-2012 lows. So, in the end, Icahn was a winner and so were Chesapeake's shareholders. And this transformation is far from over.

Another fighter
That's why Einhorn taking positions in BP and Anadarko is such interesting news. The legal issues facing both companies, which the activist investor believes will be less onerous than the market is pricing into the shares, is the big reason.

Anadarko just lost a ruling related to a Kerr-McGee spin off that could cost anywhere from $5 billion to $14 billion. Unfortunately for Anadarko, it bought Kerr-McGee in 2006. Investors hate uncertainty and that's a big range.

However, Einhorn believes the ultimate cost will be toward the low-end, and there's still plenty of legal wiggle room to change the outcome. All told, Einhorn believes there could be upside because of investor overreaction.

Like Buffett
Although Einhorn isn't buying a whole company, his Anadarko logic is more like Buffett than Icahn. For example, Buffett's Berkshire Hathaway recently agreed to "buy" the pipeline services business of Phillips 66 (NYSE: PSX  ) for $1.4 billion. Buffett is adding this company to his collection of utility and pipeline assets in the energy space because it helps increase pipeline throughput—something that has upside potential because of the industry's current limitations.

And while Buffett has the resources to buy entire companies when he sees an opportunity, Einhorn isn't really in that business. This Anadarko deal is probably as close as he gets. 

The eternal optimist
That said, Einhorn's BP investment seems like it might be a mixture of Buffett and Icahn. Einhorn notes the legal overhang of the Deepwater Horizon disaster, but believes the outcome will be less severe than investors expect. However, he also highlights the need for more asset sales and stock buybacks.

Those last two are the types of things with which activist investors tend to get intimately involved. Expect Greenlight Capital to quietly push BP's management. If BP isn't willing to work with Einhorn, however, the issue could quickly spill into the public realm—an area in which this activist investor isn't afraid to tread.

Although there are many examples, his fight with Apple (NASDAQ: AAPL  ) to get the tech giant to return more of its cash horde to shareholders is a big one. It got ugly, involved a lawsuit, and was played out well within the view of the general public. In the end, Apple has gone in the general direction Einhorn suggested and is paying shareholders more. It wasn't exactly the way Einhorn wanted, but it's hard to suggest that he didn't influence that outcome at this aging tech giant (Note that Icahn is now taking Apple on, too).

Is it worth the risk?
Investing on the coattails of dissident investors is always risky since they can cut and run at any time. Because of this, Greenlight's buying of BP and Anadarko shares shouldn't be the only reason to invest. However, if you agree with his reasoning, it's good to know there's someone involved who will fight for your cause—like Icahn did at Chesapeake.  

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