Ashraf Eassa
Long/short equity, contrarian, independent research, tech

Stay Out Of Bankrupt Patriot Coal's Equity - This Run Up Is Irrational

Patriot Coal Corporation (OTCQB:PCXCQ) is a producer and marketer of coal in the eastern United States - and it's also bankrupt. While I believe that an interesting way to speculate on Patriot's turnaround (albeit highly risky) is to actually own the bonds (convertible debt trades at $0.10 on the dollar, senior debt worth $0.48 on the dollar, and even the debtor-in-possession notes trades slightly below par), the recent doubling of the soon-to-be worthless equity is mind-boggling.

This Business Is In Significant Trouble

It was recently announced that the federal appeals court would keep Peabody Energy (BTU) (Patriot's former parent company) on the hook for the health benefits of about 3,100 retired Patriot Coal miners, which actually turned out...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
FREESA PRO MEMBERS
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details