Seeking Alpha

Mark Anthony's  Instablog

Mark Anthony
Send Message
Mark Anthony, is an IT professional and who had a scientific research background before joining the information revolution. Visit his blog: Stockology (http://stockology.blogspot.com/)
My blog:
  • A New Round Of Chinese Economy Stimulus Has Started 6 comments
    May 30, 2012 1:31 PM | about stocks: Q, PCXCQ, ACI, ANR, BTU, SWC, WLT, ARLP, BKH, WLB, CHK, ACA, GLD, SLV, USO, UNG, CAT, XOM

    Over the week end, there is strong signal from China that a new round of money spending and economy stimulus has started quietly.

    I have submitted an article to discuss it.

    Irony to its name, the National Development and Reform Committee (NDRC) is widely criticized for strong hand control of the economy.

    All of a sudden, local officials rushed to visit NDRC like pilgrims, "eat and sleep with them by 24/7". Why? Because they have big money to spend and they can decide what projects proposed by local governments get the money!

    The report described an amazing scene! Local photocopy shops, taxi drivers and hotels saw their businesses boomed. Trash collectors complained they had to work over time to clean up the paper trash. Local officials from around the country carried heavy document packs and waited patiently to be called in to pitch their projects.

    This guy, a mayor from a Southern China city, kissed the document with joy outside the gate of NDRC. They just approved a 10M tons per year new steel project in his city. TEN MILLION TONS of steel a year. Youthought China has enough steel capacity already? They felt they need more and they are buidling more, Paulo Santos!

    Investors should consider investment opportunities related to China's new spending binge, and related to commodities.

    The biggest investment opportunity is in something China needs desperately: the black gold coal. China needs coal and US has the largest coal reserve in the world. Look at China's coal production and demand growth in the past decade (in unit of 10,000 metric tons):

    (click to enlarge)

    Look at this satellite photo of a giant depleted coal mine in China! China now burns seventeen (17) such big holes of coal a year:

    (click to enlarge)

    China's coal imports in first four months of 2012 were up 69.6% over last year to reached 86.55M tons. According to Chinese Custom, physical tonnages of all imports were up 17.5%. Are such growth paces slow downs? To the party bosses, an 8% growth is not enough to Wei Wen. Thus the new spending binge!

    I recommend these great values in US coal at fire sale prices:

    • James River Coal Company (JRCC)
    • Patriot Coal (PCX)
    • Arch Coal Inc. (NYSE:ACI)
    • Cloud Peak Energy (NYSE:CLD)
    • Alpha Natural Resources (NYSE:ANR)
    • Consol Energy (NYSE:CNX)
    • Black Hills Corp. (NYSE:BKH)
    • Walter Energy (NYSE:WLT)
    • Westmoreland Coal (NASDAQ:WLB)
    • Peabody Energy (NYSE:BTU)
    • Nacco Industries (NYSE:NC)
    • Alliance Resource Partners LP (NASDAQ:ARLP)
    • Market Vectors Coal ETF (NYSEARCA:KOL)

    Stay tuned as China's new economic stimulus quietly unfolds.

    Disclosure: I am long JRCC, PCX, ACI, ANR, BTU, SWC, PAL.

Back To Mark Anthony's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (6)
Track new comments
  • Mad330
    , contributor
    Comments (71) | Send Message
     
    Mark, your thoughts on Patriot Coal new chief executive Irl Engellhardt?
    29 May 2012, 07:06 PM Reply Like
  • Mark Anthony
    , contributor
    Comments (3601) | Send Message
     
    Author’s reply » Don't know this guy so can not comment. But I noted Whitting is not staying in PCX but leaving. Maybe he was recruited back to BTU?
    29 May 2012, 08:14 PM Reply Like
  • Ravi Ramenani
    , contributor
    Comments (48) | Send Message
     
    Based on my research Irl Engellhardt was a former CEO of BTU a well respected and well positioned coal company in the world. He served as the CEO of BTU for 15 years which includes 2002-2003 dark years for coal, I am positive very positive on this news. Also the new COO was former CEO of ICO which was bought over by ACI. ICO was a pure mettalurgical play and I am sure he has good experience dealing with Met coal which is base for PCX. I am very positive on this news and actually wondered looking at such a short rally....I am sure people will recognize their credentials and what they can do in future. I am a long term bull on coal especially at these prices.
    29 May 2012, 08:18 PM Reply Like
  • Mark Anthony
    , contributor
    Comments (3601) | Send Message
     
    Author’s reply » Yes it looks like very positive. A former CEO of BTU certainly would not want to take over a smaller coal company if it was on the brink of bankruptcy to ruin his own reputation. I think the development might also hint the possibility of BTU re-acquiring PCX?
    29 May 2012, 09:16 PM Reply Like
  • Junc Bond
    , contributor
    Comments (229) | Send Message
     
    Mark, that comment absolutely proves you have not done your homework on one of your so called largest holdings. Irl Engelhardt is the current Chairman of the Board for PCX, and if you do not believe his reputation is already on the line, well.... He has been a board member ever since it was spun out from BTU. He was the CEO of BTU at one time. Obviously he knows the business, you certainly do not. He is now taking on the CEO role since Whiting is being forced out. I have some news for you on BTU repurchasing PCX; as you know BTU will be on the hook for some PCX liabilities once they file Ch. 11 as I previously explained. There is 0% chance of a repurchase. BTU saddled PCX with a bloated balance sheet they no longer wanted to deal with. Then PCX went out and bought Magnum, another CAPP disaster. Tell me again why PRB/OZ exposed BTU wants to get back into CAPP?

     

    I am flabbergasted you have not read the latest annual report and proxy which clearly spells all this out.

     

    What follows is Engelhardt's bio from the proxy: http://bit.ly/Kb8nEa
    IRL F. ENGELHARDT, age 65, has been a Director of the Company and Chairman of the Board since October 2007, when the Company was spun-off from Peabody and became a separate, publicly-traded company (the “spin-off”). Mr. Engelhardt also served as Executive Advisor to the Company until December 31, 2010. Prior to the spin-off, Mr. Engelhardt served as Chairman and a director of Peabody from 1998 until October 2007. Mr. Engelhardt also served as Chief Executive Officer of Peabody or its predecessors from 1990 through December 2005. After joining a predecessor of Peabody in 1979, he held various officer level positions in executive, sales, business development and administrative areas, including Chairman of Peabody Resources Ltd. (Australia) and Chairman of Citizens Power LLC. He served as Co-Chief Executive Officer and executive director of The Energy Group from 1997 to 1998, Chairman of Suburban Propane Company from 1995 to 1996, Chairman of Cornerstone Construction & Materials from 1994 to 1995 and a director and Group Vice President of Hanson Industries from 1995 to 1996.

     

    Mr. Engelhardt currently serves as a director of The Williams Companies, Inc. He previously served as a director of Valero Energy Corporation (2006 to 2010), Chairman of the Federal Reserve Bank of St. Louis, Chairman of the National Mining Association, the Coal Industry Advisory Board of the International Energy Agency, the Center for Energy and Economic Development and the Coal Utilization Research Council, as well as Co-Chairman of the Coal Based Generation Stakeholders Group.

     

    We believe Mr. Engelhardt’s qualifications to sit on our Board include his more than thirty years of experience in the coal and energy industries, including as the former Chief Executive Officer of Peabody, his executive leadership of significant organizations, management experience with public companies and financial expertise.
    ----------------------...
    Here are the facts as they currently stand:
    - press release 5/29/12 says Richard Whiting out, Engelhardt taking over. Don't be fooled by the flowery language. Whiting was forced out.
    - Chairmen don't take over the company unless there is a problem.
    - There was no 'transition' period.
    - Convertible coupon is due on 5/31/12 (Thursday); will they pay it?
    - Ben Hatfield is a good man; outsider and was Wilbur Ross's top guy at International Coal Group (http://bit.ly/LF75zB); he is the leading contender for the CEO spot after the bankruptcy is resolved.

     

    Lastly Mark, I'm shocked you had nothing to say about my comments on this article http://bit.ly/LFjn6I that completely body slammed your view on PCX.
    29 May 2012, 10:38 PM Reply Like
  • rodl
    , contributor
    Comments (6) | Send Message
     
    Mark or Paulo - Do you have a resource that would tell the coal reserves in China? They have reported exactly 114.5BT each and every year since 1992. Even at a slower growth of 8% per year, everything would need to double in 9 years. Production, already at 3.3BTpy, all imports, every country's exports, everything. That does not include India, which recently reduced their proven reserves from 90BT in 2006 to 54BT in 2009. I can not understand where all of this coal will come from. The US cannot possibly double our coal production in a very short period, and more than that would be needed. Mongolia and Mozambique cannot fill that need.
    30 May 2012, 02:08 PM Reply Like
Full index of posts »
Latest Followers

StockTalks

  • Jim Rogers favors water investment! California is in a water crisis. Cardiz (CDZI) is up almost 50% today on news: http://tinyurl.com/qpddql
    Jun 5, 2009
  • China is still buying US T-Bonds and Yuan is pegged to dollar. WHY? Read my shocking discovery: http://tinyurl.com/rcuofx Enjoy!
    Jun 4, 2009
  • PEIX, a once hot ethanol play, goes Ch.11 today, as expected. Recent unusual price moves must lured speculators in. Good lesson learned.
    May 18, 2009
More »

Latest Comments


Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.