I added a small, 5% position to my book in BTU for $16.10, to commemorate the EPA issuing new power plant emission regulations.
My guess is the equity position is worth about $7 now. And they’re losing money every quarter. But this is investing, not guaranteeing. Market forces will either correct through higher electricity prices for consumers, rebalancing the coal market. Or, a third of the US grid goes offline and gun/ammunition manufacturers become the new Coca Cola.
I’m also looking at a few distribution terminals I think might see big volume increases as struggling coal producers – coupled with natural gas exporters looking to Europe – try and tap foreign markets for trade.
I’m moving slow here, not in any rush to push the limits. This is going to be very volatile; lots of room to play individual names sawing 25% up and down, but the overeager will lose a finger if they don’t give themselves room to back off.
The US is about to be the world’s biggest energy exporter for the next century. You can quote me on that. It’s just a matter of edging in and building position.
Your move.
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Nice buy. Do you have any favorite oil & gas pipeline/terminal plays for a long-term holding? I was thinking $FISH or $SXE. Thanks Cain.
Not at the moment. I used to like TLP, but am suspicious that they are on the bad end of a Keystone pipeline (if it ever gets approved). I also consider them untrustworthy because of some recent ownership transfers/politics/etcetera.
But if the theoretical terminal company I mentioned above is a good play, it should nail all energy forms.
Kap – be aware those are both MLPs.
How bout this one Cain?
http://finance.yahoo.com/q?s=WTSHF&ql=0
I’ll take a closer look later
Limited growth unless they are able to acquire another terminal. If CNX were to sell Baltimore Terminal to WTSHF then it’s a rocket but CNX could spin off it’s terminal to stockholders as an MLP as well. CLD & BTU are the low cost exporters of coal in the Northwest U.S.
Cain, what do you mean when you say that “your guess is the equity position is worth $7?” Appreciate the clarification and insight.
What I mean is “I suspect, given my inability to see the future, that one might reasonably expect BTU to implode 50% from these levels, unless something changes.” And I’m buying a starter position now because I think things will change.
But if they don’t, say hi to $7
Cain, thanks for clearing this up. I’ll be tracking BTU intently, and hope it turns out well for you.
Caine, Have you ever looked at ADES? been in n out but interesting coal tech
Problem is all the Coal companies are all loved by “value” investors, so it isn’t really a contrarian pick. Just look at all the outperform ratings on all the coal stocks on fool.com
I’d rather be in hated stocks with good fundamentals than loved stocks with poor.
(laughter) have you seen their shares?
No reason NRP should be trading at 3x book with the BK risk they have. People are either in love with the stock, or the dividend.
The real problem is that 0bama is anti-coal. I will wait til his term is over, before getting bullish on coal.