Market Overview

Coal Sector Rallies; Short Interest A Factor?

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Arch Coal Inc (NYSE: ACI) gained more than 16 percent Tuesday and a raft of coal producers headed in the same direction after Arch said cheaper oil will cut its 2015 production costs.

But a short squeeze may have a role in Tuesday's sector rally: With coal prices at their lowest level in six years, shorts have targeted an increasing portion of producers' float.

Arch also suspended its dividend Tuesday, citing "ongoing market weakness" and a need to "preserve liquidity."

Arch posted a wider-than-expected loss but revenue beat Wall Street views by a modest margin.

Short interest recently accounted for nearly 24 percent of Arch's 212.3 million shares outstanding.

Arch closed at $1.10.

Arch's dividend suspension follows a similar move last week by Peabody Energy Corporation (NYSE: BTU), which gained more than 7 percent.

Nearly 20 percent of Peabody's 271.4 million shares outstanding was held as short interest as of January 15.

Walter Energy, Inc. (NYSE: WLT) gained more than 6 percent, changing hands at $1.03.

Short interest recently accounting for about 43 percent of Walter's 68.1 million shares outstanding.

Consol Energy Inc (NYSE: CNX) gained more than 6 percent to $32.26, with nearly 8 percent of its 230.3 million shares are held as short interest.

Rhino Resource Partners, L.P. (NYSE: RNO) picked up 5.6 percent, changing hands at $2.42, although little of its float is held as short interest.

Posted-In: Earnings Guidance Short Ideas Trading Ideas

 

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