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What: Shares of Peabody Energy (NYSE:BTU) are up by 20% at the time of this writing on the news that the Soros Fund Management, the investment firm of George Soros, has added a position in the company to its fund.

So what: The reason this is making headline news more than anything else is that George Soros has been a long-time opponent of fossil fuel use and has advocated for stronger environmental policies. So some investors out there must seem to think that he is having a change of heart. 

The reason that Peabody would look appealing to someone who has not been a fan of coal companies is that shares of Peabody are so cheap. On a price-to-tangible book value basis, shares of Peabody trade at $0.19 to the dollar. So in the event of a turnaround in the coal industry, it has the possibility of growing significantly.

Now what: Before you decide to follow Mr. Soros into a position in Peabody as well, you need to keep this in context. Soros Fund Management's acquired a $2.4 million position in an $11 billion fund that has positions in more than 250 companies. This Peabody purchase is less than 0.02% of the total fund, so even in the event of a total loss in this position, it is in no way going to impact the overall performance of the fund.

So take this news with a very big grain of salt, because for someone who doesn't have $11 billion to invest, buying shares of Peabody is still a high-risk investment. It's currently sporting a net debt-to-EBITDA ratio of 9.2 times, and its EBITDA-to-interest expenses ratio is 1.4 times, which suggests that its debt load is getting too much to handle under current market conditions. Without some significant changes in the price of coal soon, Peabody could find itself in a lot of trouble. 

Tyler Crowe has no position in any stocks mentioned. You can follow him at Fool.com or on Twitter @TylerCroweFool.

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