The AGL Energy Limited (ASX: AGL) share price is sitting right at all-time lows, currently trading for $5.19 per share.
This comes as shares have plummeted 57% in 2021 during a period which saw the S&P/ASX 200 Index (ASX: XJO) gain 10%.
Does that mean the ASX 200 energy provider now represents good value?
According to Kardinia Capital's portfolio manager, Kristiaan Rehder, not at all.
Poor value despite looking cheap
The Bennelong Kardinia Absolute Return Fund's long/short strategy enables the fund to go long ASX shares it believes will outperform and to short stocks it believes will lose value.
Speaking to The Motley Fool last week about why the fund opts to include shorting in its strategy, Rehder explained:
The short book enhances the investment universe that we can invest in.
Most long only funds will usually put their pen down and stop the investment process when the fund manager identifies too many red flags in the company they're analysing. With our strategy, we can continue working and potentially profit from that trade by going short.
As for the AGL share price being good value, Rehder said (as reported by the Australian Financial Review):
We have been short AGL for some time. We believe the company is facing structural challenges and is poor value despite looking 'cheap'. It has faced headwinds from lower electricity prices and margin compression in the gas business, and we estimate more than 80 per cent of current generation is from baseload coal-fired power stations.
AGL is undertaking a demerger later this year, but we don't believe either of the two demerged companies will have a particularly strong balance sheet. Having said that, the share price has suffered a material de-rating, so we have reduced the size of our position accordingly.
AGL share price snapshot
The AGL share price really began to come under pressure way back in May 2017. At that time shares were trading for $27.13. Since then, the AGL share price has plummeted 81%.
More recently, shares are down 16% over the past month.
