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pete123
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I am an engineer in my early 30's living in the US. I am particularly interested in energy, lately natgas and coal, and have a bit of a bias for fearing inflation. Traded stocks and ETF's since 2004, options since 2012.
  • JRCC Liquidity Countdown 15 comments
    Jan 29, 2013 12:58 AM | about stocks: Q

    here I am using a cashflow-like figure which is essentially

    operating income - minus DD&A + capex + interest expense.

    this filters out investment activity, and the timing effects of accounts payable/receivable and so forth. These get washed out pretty quickly over time.

    ----------------------------------------------

    time / cashflow like figure $MM / liquidity at end of quarter $MM

    2012q3: -27.5 with 172 left

    2012q4e: -44 with 128 left > we are here now

    2013q1e: -38.5 with 89.5 left > likely point of no return. time to shop around for new management and a good law firm

    2013q2e: -32 with 56.5 left > time to prepare bankruptcy paperwork

    2013q3e: -32.5 with 24 left > time to file

    2013q4e: -29.5 with 0 left

    also, now (end of jan 2013), nearly all the 2013 pricing for thermal is locked in, so JRCC investors can completely stop looking at the thermal market. All it takes to get the numbers above is a moderate met recovery (i.e., recover by the end of 2013 from met prices of 2012q4 halfway back to the peak met prices jrcc was able to get at its best). that scenario is what's above, i think it's actually a bit optimistic.

    Finally, note that JRCC, due to its weak situation, requires permission of senior bondholders to borrow money, raise capital, or try to sell anything. and even if it wanted to raise debt, subordinated debt is trading at 40% yield, so forget about borrowing anything!

    super drastic cutting of operations and capex might become forbidden too as the liquidity runs out, since it would be a sort of willful destruction of what can reasonably be expected to soon become the bondholder's property.

    i'm sure management has one or two more tricks up their sleeve so I want to give them an extra quarter for that, beyond what's above. but probably this year is it.

    finally, if anyone reads this, playing this name in either direction is definitely in the playing-with-fire category of investments.

    Disclosure: I am short JRCC.

    Themes: coal, energy Stocks: Q
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  • pete123
    , contributor
    Comments (884) | Send Message
     
    Author’s reply » CNX 2012q4 results:

     

    looks like during 2012q4, CNX priced it's low-vol met for delivery in 2012q4 at $105, and for delivery in 2013q1 at $110 or so. This brought their average low-vol met overall price sold to $129 for 2012q4 and $121 for 2013q1 which appears fully sold now...
    31 Jan 2013, 08:48 AM Reply Like
  • freeman8201
    , contributor
    Comments (504) | Send Message
     
    hahahaha...can ya do one with arch? YOu look up patroiat and it's history, the company was evolved from Peabody, and arch, when Peabody begat patriot and arch magnum. With it was all of their retires pension holders. And Patriot only filed becaue a buyer defaulted, which was from china. After P rampped up it captial spending on its met. coal assets.

     

    I'd like to see your equation pan out.
    5 Feb 2013, 10:01 PM Reply Like
  • pete123
    , contributor
    Comments (884) | Send Message
     
    Author’s reply » thanks again. I actually started all this looking at arch. Even though they're either just breaking even or losing money on literally everything except Western bit, I think they can easily hang on long enough to catch the next round of commodity-inflation from the FED/ECB/BOJ etc.

     

    But i'm starting to think, if I want to wait that long, why not go with a healthier company instead? like CLD (PRB coal) or WLT (met coal)?

     

    My only luck with ACI has been hit-and-run trades trying to catch $1 movement from chart resistance (it was up from $6ish all of last year, also went down from $9 successfully after 2012q3). Not doing this at the moment.
    6 Feb 2013, 09:27 AM Reply Like
  • freeman8201
    , contributor
    Comments (504) | Send Message
     
    ok...i"m in on arch. I listen their webcast/podcast deal yesterday well about half of it anyway (i listen to it later). You're right on the dollar when you say they're only profiting from Western bituminous.
    6 Feb 2013, 01:42 PM Reply Like
  • pete123
    , contributor
    Comments (884) | Send Message
     
    Author’s reply » another update, from alpha's results. Comparing alpha's 2013 estimates released just now to alpha's 2013 estimates released in the previous quarter, i get that for new 2013 tons commited and priced during 2012q4, alpha got:

     

    eastern met at $106 / ton (19% decrease q/q and totally consistent with every other company reporting in terms of percentage drop -- the mix of different quality met grades, and therefore the actual price, varies between the different coal comnpanies).

     

    eastern thermal at $56 / ton.

     

    if you project these prices onto jrcc's as-yet-unpriced 2013 production, this confirms the estimates from before, and actually the thermal gets a little worse.
    14 Feb 2013, 12:00 PM Reply Like
  • pete123
    , contributor
    Comments (884) | Send Message
     
    Author’s reply » Well that was a scratch. Didn't expect they could just pull the plug on half their capp thermal production and not pay a huge penalty. The thesis of being forced into bankruptcy in 2013 is probably shot now, time to take limited gains and recalculate.
    7 Mar 2013, 10:12 PM Reply Like
  • Mad330
    , contributor
    Comments (76) | Send Message
     
    would U be a buyer here? (short-term)
    12 Mar 2013, 11:29 PM Reply Like
  • pete123
    , contributor
    Comments (884) | Send Message
     
    Author’s reply » right now? i am closing part of my short position (actually long put's), so that is sortof like buying, but to remove risk that I was a little too aggressive about. I would personally not open a long position at $2.50.

     

    I think that by shutting off half their CAPP thermal, JRCC has the opportunity to come really close to breaking even this quarter, by buying CAPP thermal at spot for $55-60/ton, rather than producing it themselves for $75-80/ton. But this totally depends on the timing of their shutdown vs when their contracted tons are supposed to be delivered. And by the end of the year they will have to start eating the penalties for reducing their size. In the long run they're just as screwed as before. Interesting situation though.
    13 Mar 2013, 02:37 PM Reply Like
  • pete123
    , contributor
    Comments (884) | Send Message
     
    Author’s reply » Update. So it looks like I totally mismanaged this trade, despite getting the financial analysis mostly right.

     

    Just closed the march batch of put's, which were a mix of $3 and $2 strikes. The $2's are a total loss, which was expected, those were a longshot with an enormous potential return if JRCC had filed BK, or even just not downsized. The $3's should've been a substantial gain but my timing this week was absolutely horrible. Could've walked away with a 30% combined gain last thursday morning. Could've walked away with a 10% gain much of the time this week. Instead I took a 5% combined loss on the march batch of put's. Not happy.

     

    Also bought some April $3.50 put's last friday for $1.20 to roll the position forward, albeit with much less leverage than before. With $.20 of time value I'm thinking it might be good to cash it out sooner rather than later.
    15 Mar 2013, 03:47 PM Reply Like
  • pete123
    , contributor
    Comments (884) | Send Message
     
    Author’s reply » sold Apr put's. 8% gain.
    18 Mar 2013, 03:58 PM Reply Like
  • pete123
    , contributor
    Comments (884) | Send Message
     
    Author’s reply » sold Sep put's. 20% gain.
    21 Mar 2013, 02:37 PM Reply Like
  • pete123
    , contributor
    Comments (884) | Send Message
     
    Author’s reply » sold Jan put's. 40% gain. feel like a super schmuck for not holding the Apr's. ah well.
    27 Mar 2013, 03:49 PM Reply Like
  • Mad330
    , contributor
    Comments (76) | Send Message
     
    Pete, your thoughts on JRiver's recent debt exchange. Do you feel they can now survive by extending a few more years of poor market conditions for the coal industry.
    17 May 2013, 08:59 PM Reply Like
  • pete123
    , contributor
    Comments (884) | Send Message
     
    Author’s reply » Hi Mad330.

     

    Just saw the press release. They're down to something like $50MM remaining debt due 2015, so they have almost cleared that hurdle, which is great news for stock holders obviously.

     

    Before that, I they still need met coal prices to recover, so that's the big one I suppose. At today's prices they still don't make it. But they're doing a fantastic job of turning the stock into a leveraged met coal play, while buying time on the debt problem, so that alone gives the stock some value.
    19 May 2013, 03:28 PM Reply Like
  • pete123
    , contributor
    Comments (884) | Send Message
     
    Author’s reply » coking coal, see right hand side chart (about a month out of date)

     

    http://bit.ly/14FXAb1

     

    china steel price (they make half the world's steel now), which drives the above, hasn't been doing well this year. But with massive central bank devaluation, who knows, anything can happen.
    19 May 2013, 03:56 PM Reply Like
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