Soros Fund Management disclosed minuscule (for Soros) stakes in Peabody Energy (BTU +24.6%) and Arch Coal (ACI +42.1%) at the end of last week. Combined, the Peabody holding of 1.03M shares and Arch holding of 533K shares amounted to less than $2.5M versus AUM north of $20B.
The tiny stakes in the two near-bankrupt coal producers could be thought of as a lottery ticket, or maybe it's just The Palindrome - well known for railing against coal as it pertains to climate change - tweaking his political enemies.
The stocks of both companies didn't do a whole lot for two sessions after the disclosure, but soared yesterday as Arch Coal was reported on working out a debt swap compromise with its creditors.
News China could be producing a whole lot less in the way of carbon emissions than previously thought could be sending the two flying higher again today.
U.S. power stations generated 31% of electricity from natural gas in April compared with 30% from coal, research firm SNL Energy estimates, the first time that gas has overtaken coal. In 2010, the latter accounted for 45% of power.
The milestone has been a long time in coming, with the shale boom causing gas prices to plummet and increasing regulation leading to higher expenses for coal.
Coal stocks (KOL +0.3%) are rallying after the Supreme Court threw out the EPA’s first-ever rules requiring coal-fired power plants to cut emissions of mercury and other toxic air pollutants, saying the agency should have weighed the cost of compliance in deciding whether to regulate.
The ruling means the EPA must go back to the drawing board, which possibly could push any new emissions rules past Pres. Obama’s time in office.
Rhino Resource Partners (NYSE:RNO) says it is temporarily idling most of its Central Appalachia coal operations due to ongoing weakness in coal markets, affecting nearly 200 employees.
RNO says demand for Central Appalachia steam coal has fallen to unprecedented levels due to low-priced natural gas and government regulations, and met coal prices remain at depressed levels due to persistent worldwide oversupply and weak demand from China.
RNO says future market conditions would determine how long the operations remain idle.
Rhino Resource Partners (NYSE:RNO) is downgraded to Sell from Hold at Stifel, which expects a significant selloff as a result of RNO's distribution cut to $0.08/unit on an annualized basis.
Stifel believes the decision to cut the distribution to unitholders reflects a worsening of coal markets so far in 2015 and the desire to preserve liquidity in advance of the July 2016 maturity of RNO's senior secured credit facility.