Bookeeping: Adding Coal Exposure
Posted on Thursday, April 3rd, 2008 | In CommoditiesAgain, the on and off nature of the commodity “bull” is almost funny at this point. Today it’s back on it appears…. with some firming in the charts I’m adding to all my coal names.
Patriot Coal (PCX) is a name I do not own, but sold off (was a spin off of Peabody Energy) -up massive today on a purchase yesterday and upgrade today – I’m mumbling to myself about missing that one.
Coal producer Patriot Coal Corp. said Wednesday it agreed to buy Magnum Coal Co. for about $559 million. Under the terms of the deal, Magnum shareholders will get about 11.9 million shares of newly issued Patriot common stock. Patriot will also assume debt estimated at $150 million. Including the debt, Patriot estimated the deal was worth $709 million.
Magnum operates 12 mines and seven preparation plants in Central Appalachia. With the addition of Magnum, Patriot said it will be the seventh largest coal producer in the U.S.
Walter Industries (WLT), a name a reader pointed out to me which has coal, natural gas, and I kid you not – home financing, all under 1 roof is also another name who technically has one of the most beautiful charts in my entire watch list.
But I’m adding to my 4 pure play names in my “coal basket” today: Peabody Energy (BTU), Arch Coal (ACI), Consol Energy (CNX), and Massey Energy (MEE). I’ve posted all the charts below so you can see why they look like they are turning up from a technical standpoint. Why they sold off, outside of hedge funds deciding en masse they are no longer worthy of their investment dollars, is beyond me. Fantastic fundamentals did not change last week, and then reverse again this week.
Long Peabody Energy, Arch Coal, Consol Energy, Massey Energy in fund; no personal positions
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 About Trader Mark (http://fundmyfund.blogspot.com)
Mark is a self taught private investor, fascinated by the market since an early age, discovering mutual funds as a teenager in the 80s, and then moving to equities by the mid 90s. His equity focus is identifying secular growth trends, and the companies most likely to benefit from these macro trends. Stocks are identified through fundamental analysis, although basic technical analysis is used in determining entry and exit points. With a degree in Economics from the University of Michigan, a broader understanding of the economy as a whole, along with interpreting investor psychology is also a major interest for Mark. His career background has focused on financial analysis in corporate America. |
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