Bookkeeping: Adding Peabody Energy (BTU) on Earnings Drop

Coal is one of the few sectors I am looking to add exposure to on any earnings misses. With the 10% drop in Peabody Energy (BTU) this AM off of earnings, I am incrementally (i.e. slowly) adding exposure here around $50. This takes my exposure back up to 2% of the portfolio (up from 1.5%). I am in no rush to add anything in this type of market. But I sold some shares off 2-3 days ago near $59 [Trimming Many Positions], so I am simply adding these shares back at a 15% discount. The stock broke its 50 day moving average and now has fallen all the way down to its 200 day moving average ($50.50) with today's move and is in fact now trading intraday below that level.

Folks this is the type of market we have. Buy and hold is dead for now. I have outlined the longer term story for coal, so I am going to be building these names on pullbacks. But with the market prone to more weakness, I am not going to rush. I really don't care about current earnings or even next quarter's earnings for this sector - the long term in both potential for massive increase in exports and rising prices will bode well. Again, no rush to load up. As you can see from guidance below, it's a huge range because there are a lot of variables in play. But Peabody especially with their Australian operations should benefit from this major weather issue in China. [China has a Power Shortage, South Africa has a Power Shortage]

• Peabody Energy Corp (BTU), the world's largest coal producer, on Thursday posted lower fourth-quarter earnings, hurt by the company's spin-off of its Patriot Coal Corp PCX.N unit.
• Net income was $35.8 million, or 13 cents per share, compared with $175 million, or 65 cents per share, a year earlier. Earnings from continuing operations were 71 cents per share, from 68 cent per share in the year-ago period.
• Revenue rose 10 percent in the fourth quarter as the company sold more coal, offsetting lower prices at its Australia operations.
• Peabody said it expects to earn $1.00 per share to $1.85 per share in 2008, with earnings before interest, taxes, depreciation and amortization (EBITDA) between $1.0 billion and $1.3 billion.
• For the first-quarter, it expects earnings between 5 cents per share and 25 cents per share.

Long Peabody Energy in fund; no personal position