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Stone Fox Capital Advisors is a registered investment advisor founded in 2010. The firm offers portfolio management with a focus on opportunistic stocks providing secular growth trends at an affordable value. An emphasis is placed on fundamental analysis though charts are used for timing entry... More
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  • Massey Energy Directors May Challenge CEO on Sale 0 comments
    Nov 22, 2010 1:08 AM | about stocks: MEEZQ, PUDA, MT, ACIIQ

    While I've been a fan of how the CEO of Massey Energy (NYSE:MEE) has handled the investigation of the Upper Big Branch (UBB), it does appear that his leadership places the company to direct odds with MHSA. Mr. Blankenship has done a great job of showing that government ventilation plans may have been the cause of the UBB explosion. Rolling over and taking all responsibility didn't work so well for BP in the Macondo explosion and oil leak. 

    According to the WSJ it appears that he BOD is willing to vote agains the long time leader of MEE. Typically this doesn't happen as the CEO usually controls the BOD like pawns. If true, MEE is likely to be sold in the near term for a nice premium. Sure the stock has run lately, but it's also below the March high. 

    The WSJ speculates that Mr. Blakenship might be the only vote against a deal. He appears to be arguing that MEE will be more valuable when the company emerges from their recent problems. Maybe so, but the time value of money and the possibility that issues could drag on for years suggests that now might be the time to strike. Besides the met coal market is hot now so marketing the 1.3B mt met coal asset seems ideal now. 

    As I've detailed many times, with our Opportunistic portfolios holding sizeable positions in both Alpha Natural Resources (ANR) and MEE in addition to China coal player Puda Coal (OTC:PUDA) we have become a lot more agnostic about the long term prospects of MEE and more interested in cashing in with a big premium buyout. Of course, if it doesn't come to pass we'll continue to plug away with a resource rich asset in MEE. 

    Monday morning could be interesting though it might be next Monday or a month from now. It appears that most investors involved in MEE prefer a buyout and due to their rich assets the options will be attractive. Time will tell. 

    Via WSJ:

    the 20-year CEO of Massey may not be able to persuade fellow directors to keep the Richmond, Va., company independent during the board's annual strategy-review meeting that began Sunday at the Greenbrier Resort, in White Sulfur Springs, W.Va.

    "His vote is only one of 10," and the 10-member board may choose a strategy based on a split vote, this person said. The final outcome may be based on a vote of eight to two or nine to one, according to this person.

    Badge Humphries, a lawyer in Mt. Pleasant, S.C., who represents Massey shareholders suing the board, said a sale of the company could nullify the suits because the Massey shareholders would no longer have standing to pursue claims against Massey's officers and directors.


    Disclosure: Long MEE, ANR, PUDA
    Stocks: MEEZQ, PUDA, MT, ACIIQ
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