Tuesday, April 13, 2010

Bookkeeping: Closing Massey Energy (MEE) - Would Like to Replace with Walter Energy (WLT)

I essentially flipped a coin between Massey Energy (MEE) or Walter Energy (WLT) when I began the stake in MEE, looking for coking coal exposure.  Right after I purchased it (small stake), it did an offering allowing us a more attractive price to build up a position.  Then the stock rallied sharply so it looked like it was going to work out very nicely.  However, since the mining accident a dark cloud has come over the name....

This is a tough one because it is about time frame.   In the long run I am sure this will be a good price for the stock but in the near term I'd expect a lot of scrutiny which I assume weighs on the stock.  Because of that potential I am going to cut the 2nd half of the stock (8% loss on this batch) and close out the position; the first half was sold last week.

Can't do much about situations such as this, the trade was working out perfectly but out of the blue news items will happen over a course of the year, for which you cannot prepare for.

I would like to move the monies into Walter Energy (WLT) but this is an example of a stock that has run up with no rest and while it can continue it becomes increasingly difficult from risk/reward to just chase...

I don't know if the recent action is a "double top" in WLT... it could possibly be.

Another option is to move some of the money into Alpha Natural Resources (ANR) but the name has not been performing as well as WLT or MEE (pre accident) are/were.

Long Alpha Natural Resources in fund; no personal position


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