Why Corning Is A Sell Above $15 And A Buy At $13 Or Less [View article]
I've been a long time bull of Cornings, and I don't think there's any reason to sell here. That being said, this run has been way too fast and furious for my liking, and I am really hoping for a vented selloff for the long-term sanity of this stock.
February/March of 2011 was the last time it was this overbought in the last three years, and we all know what happened to the stock after that.
I think if you're writing calls then now might be a good time to look into that, but in terms of buying I see no reason why to start now with the stock this overbought.
The Darkest Coal Moment Before Dawn [View article]
Mark, I must say I find it hilarious you are continuing to write about coal, and that you've now changed the way you describe your PCX position to a "bet".
For those not aware, Mark certainly did not consider this a bet before they filed. Here are some choice quotes of his on PCX, lest anyone be tricked that he has any idea what's going on:
>>I have big positions in coal. I lost nearly a million dollar [sic] on paper just on coal alone in recent month [sic]. But it will all come back. We will see. This is the single biggest investment opportunity I see in ten years. A temporary paper loss is well worth it. I am sticking around.<<
>>There is no possibility of PCX going bankruptcy given all the observations. The theoretically hypothesized quick bankruptcy could only exist in a different universe.<<
>>All I ever heard these days are BANKRUPTCY BANKRUPTCY BANKRUPTCY BANKRUPTCY BANKRUPTCY BANKRUPTCY.
It's pure fearmongering. It takes many years of adverse market condition in a sector to drive any players to bankrutcy [sic] at all. I expect quick turn around in the coal sector. There will be no bankruptcy in any coal names.<<
>>When the bond price drops it only means the yield is going up.
If I were a bond holder it makes sense to sell the bonds and use the cash to buy dirt cheap shares instead. That can explain why the PCX bonds fell. Isn't reaping a 10+ fold gain in equities in the next one year better than holding the bonds yielding less than 10%? <<
>>PCX controls 1.922 billion tons of proven and probable coal reserves. If you value each ton of coal reserve for just $2 per ton, PCX should be easily valued at $3.8B worth but it is now valued for only $224M. That means PCX's share price can easily go up 16 fold given a more fair market price of coal. That is being conservative! I think the coal reserves underground should really be valued for at least $10 per ton. <<
>>Right now some one is selling PCX for $1.86 a share. The same people bought those shares at double digits a few months ago. They will come back to buy the same share at $60+ a year from now. But today they are selling at $1.86. I wonder where these people come from. Of course these folk would call me insane because I refuse to sell here but instead am buying more. <<
>>[...]if PCX drops by 50% tomorrow and every one is selling, I am going to double down and move a bigger chunk of my portfolio into PCX. It is a very worthy bet to put more money into it while every one is selling like they are seeing the end of the world. <<
Why I Am Sticking With Patriot Coal [View article]
Mark, you made a gutsy call and you were incredibly, incredibly wrong. I suggest you take some time off from writing and reflect on where you went wrong. You clearly DO NOT understand the coal industry.
Standard & Poor's downgrade of James River Coal (JRCC -15%), which forecast deteriorating liquidity for the company based on the likelihood of weaker coal markets through 2013, is reverberating through the coal sector, also sending peers plummeting: PCX -7.6%, ACI -5.1%, ANR -2%, BTU -1.1%. [View news story]
Have you been following the price of natural gas? That is what crushed this industry.
Standard & Poor's downgrade of James River Coal (JRCC -15%), which forecast deteriorating liquidity for the company based on the likelihood of weaker coal markets through 2013, is reverberating through the coal sector, also sending peers plummeting: PCX -7.6%, ACI -5.1%, ANR -2%, BTU -1.1%. [View news story]
Pretty sure the credit for destroying coal goes to nat gas
Patriot Coal: Standing At The Precipice [View article]
Mark,
This is probably one of the more ignorant things you've written.
At this point, the bonds pretty much are equity because in chapter 11, guess who owns the company? The bondholders!
The notion that someone higher up in the hierarchy for getting a payout in the event of bankruptcy would somehow want to be lower on the totem pole as the risk of a default increased is sheer lunacy.
Patriot Coal: Standing At The Precipice [View article]
pete123, you are 100% correct. Buying Patriot and CHK are both gambles on extremely idiosyncratic, company specific risk outside of the market. They represent different idiosyncratic risks (Patriot: that management can refinance, CHK: that they can sort out corporate governance issues and complete asset sales) but they are definitely moving to their own tune.
Patriot Coal: Standing At The Precipice [View article]
Mark,
You do not know everything in coal. You do not know what the future price will be for coal, outside of what the futures markets suggest (which is more of a market guess than anything). I think it's a little preposterous of you to paint these things as black and white regarding coal.
There are also tons of players in the natural gas realm outside of CHK, which has tremendous idiosyncratic risks due to their corporate governance and debt problems. So to suggest it's a binary investment decision between CHK and coal producers like BTU is ridiculous.
Frankly, Patriot shouldn't be compared to other coal companies as they are on their own death spiral. If someone is interested in going long coal, Patriot is not the way to do it. Buying Patriot right now is more a bet that management can get their finances sorted out than that the coal market will turn around.
Patriot Coal: Standing At The Precipice [View article]
Ok, so first, "spreaded" isn't a word. Second, "fear mongering" should be used as a verb. So you probably should have said "...admit he was fear mongering". I'm not one for dwelling on semantics, but if you're trying to sway people then focusing on your prose a little bit would help.
Third, as Junc Bond mentioned, if there's a 30 day grace period it's possible that there's still some ambiguity out there. I don't have access to the premium news sources for these things (ala debtwire), but the way the stock has behaved (up ~3% friday, down almost 10% yesterday) it doesn't seem clear whether or not this happened.
Patriot Coal Is Not Going To Bankruptcy Court Anytime Soon [View article]
Chistletoe, at what price can you extract that coal though? And at what price can you then turn around and sell it?
The whole reason Patriot Coal is in this mess is they're primarily mining out of the least price competitive place in the US (Appalachia). Additionally, they have $442M in long term debt, so to say they're worth more than $250M for the equity component suggests the company is worth more than $692M to you, which is a much different argument.
Patriot Coal: Standing At The Precipice [View article]
Mark, you are thinking of that the absolute wrong way.
In your math, you're completely ignoring the cost of bringing said coal out of the ground. Your valuation there is assuming $2 in PROFIT, and that you would get all of the money tomorrow. It would take years to bring all of that out of the ground, so you'd have to discount the value there, and then there's the cost of actual extraction. Additionally, you're completely ignoring the debt they have on their books! Equity value is in addition to debt, and Patriot has $442M in long term debt outstanding as of 3/31/12.
Patriot happens to mine coal in one of the most expensive places in the United States (Appalachia) and the whole reason they're in this mess is because at the prices coal has been at for Patriot's entire existence they have not been price competitive. I urge you to look at their income statement and statements of cash flow to see how bad things have gone for them.
Frankly, if Patriot could mine coal profitably, they wouldn't be in this mess! This company was losing money way before the coal market took a dive. Complete dog of a company you should avoid at all costs. I'm short frankly.
Why Corning Is A Sell Above $15 And A Buy At $13 Or Less [View article]
Here's the three year chart:
http://bit.ly/14xInsi
February/March of 2011 was the last time it was this overbought in the last three years, and we all know what happened to the stock after that.
I think if you're writing calls then now might be a good time to look into that, but in terms of buying I see no reason why to start now with the stock this overbought.
The Darkest Coal Moment Before Dawn [View article]
For those not aware, Mark certainly did not consider this a bet before they filed. Here are some choice quotes of his on PCX, lest anyone be tricked that he has any idea what's going on:
>>I have big positions in coal. I lost nearly a million dollar [sic] on paper just on coal alone in recent month [sic]. But it will all come back. We will see. This is the single biggest investment opportunity I see in ten years. A temporary paper loss is well worth it. I am sticking around.<<
>>There is no possibility of PCX going bankruptcy given all the observations. The theoretically hypothesized quick bankruptcy could only exist in a different universe.<<
>>All I ever heard these days are BANKRUPTCY BANKRUPTCY BANKRUPTCY BANKRUPTCY BANKRUPTCY BANKRUPTCY.
It's pure fearmongering. It takes many years of adverse market condition in a sector to drive any players to bankrutcy [sic] at all. I expect quick turn around in the coal sector. There will be no bankruptcy in any coal names.<<
>>When the bond price drops it only means the yield is going up.
If I were a bond holder it makes sense to sell the bonds and use the cash to buy dirt cheap shares instead. That can explain why the PCX bonds fell. Isn't reaping a 10+ fold gain in equities in the next one year better than holding the bonds yielding less than 10%? <<
>>PCX controls 1.922 billion tons of proven and probable coal reserves. If you value each ton of coal reserve for just $2 per ton, PCX should be easily valued at $3.8B worth but it is now valued for only $224M. That means PCX's share price can easily go up 16 fold given a more fair market price of coal. That is being conservative! I think the coal reserves underground should really be valued for at least $10 per ton. <<
>>Right now some one is selling PCX for $1.86 a share. The same people bought those shares at double digits a few months ago. They will come back to buy the same share at $60+ a year from now. But today they are selling at $1.86. I wonder where these people come from. Of course these folk would call me insane because I refuse to sell here but instead am buying more. <<
>>[...]if PCX drops by 50% tomorrow and every one is selling, I am going to double down and move a bigger chunk of my portfolio into PCX. It is a very worthy bet to put more money into it while every one is selling like they are seeing the end of the world. <<
Why I Am Sticking With Patriot Coal [View article]
Why I Am Sticking With Patriot Coal [View article]
http://yhoo.it/McM6k9
Is Patriot Coal Headed For Bankruptcy? [View article]
http://yhoo.it/McM6k9
Standard & Poor's downgrade of James River Coal (JRCC -15%), which forecast deteriorating liquidity for the company based on the likelihood of weaker coal markets through 2013, is reverberating through the coal sector, also sending peers plummeting: PCX -7.6%, ACI -5.1%, ANR -2%, BTU -1.1%. [View news story]
Standard & Poor's downgrade of James River Coal (JRCC -15%), which forecast deteriorating liquidity for the company based on the likelihood of weaker coal markets through 2013, is reverberating through the coal sector, also sending peers plummeting: PCX -7.6%, ACI -5.1%, ANR -2%, BTU -1.1%. [View news story]
Patriot Coal: Standing At The Precipice [View article]
Patriot Coal: Standing At The Precipice [View article]
This is probably one of the more ignorant things you've written.
At this point, the bonds pretty much are equity because in chapter 11, guess who owns the company? The bondholders!
The notion that someone higher up in the hierarchy for getting a payout in the event of bankruptcy would somehow want to be lower on the totem pole as the risk of a default increased is sheer lunacy.
Patriot Coal: Standing At The Precipice [View article]
Patriot Coal: Standing At The Precipice [View article]
You do not know everything in coal. You do not know what the future price will be for coal, outside of what the futures markets suggest (which is more of a market guess than anything). I think it's a little preposterous of you to paint these things as black and white regarding coal.
There are also tons of players in the natural gas realm outside of CHK, which has tremendous idiosyncratic risks due to their corporate governance and debt problems. So to suggest it's a binary investment decision between CHK and coal producers like BTU is ridiculous.
Frankly, Patriot shouldn't be compared to other coal companies as they are on their own death spiral. If someone is interested in going long coal, Patriot is not the way to do it. Buying Patriot right now is more a bet that management can get their finances sorted out than that the coal market will turn around.
Patriot Coal Is Not Going To Bankruptcy Court Anytime Soon [View article]
Patriot Coal: Standing At The Precipice [View article]
Third, as Junc Bond mentioned, if there's a 30 day grace period it's possible that there's still some ambiguity out there. I don't have access to the premium news sources for these things (ala debtwire), but the way the stock has behaved (up ~3% friday, down almost 10% yesterday) it doesn't seem clear whether or not this happened.
Patriot Coal Is Not Going To Bankruptcy Court Anytime Soon [View article]
The whole reason Patriot Coal is in this mess is they're primarily mining out of the least price competitive place in the US (Appalachia). Additionally, they have $442M in long term debt, so to say they're worth more than $250M for the equity component suggests the company is worth more than $692M to you, which is a much different argument.
Patriot Coal: Standing At The Precipice [View article]
In your math, you're completely ignoring the cost of bringing said coal out of the ground. Your valuation there is assuming $2 in PROFIT, and that you would get all of the money tomorrow. It would take years to bring all of that out of the ground, so you'd have to discount the value there, and then there's the cost of actual extraction. Additionally, you're completely ignoring the debt they have on their books! Equity value is in addition to debt, and Patriot has $442M in long term debt outstanding as of 3/31/12.
Patriot happens to mine coal in one of the most expensive places in the United States (Appalachia) and the whole reason they're in this mess is because at the prices coal has been at for Patriot's entire existence they have not been price competitive. I urge you to look at their income statement and statements of cash flow to see how bad things have gone for them.
Frankly, if Patriot could mine coal profitably, they wouldn't be in this mess! This company was losing money way before the coal market took a dive. Complete dog of a company you should avoid at all costs. I'm short frankly.