Market Overview

Alpha Natural, Arch Coal Buck Short Interest Trend In Coal (ACI, ANR, RNO)

Share:
Alpha Natural, Arch Coal Buck Short Interest Trend In Coal ACI, ANR, RNO

Alpha Natural Resources (NYSE: ANR) and Arch Coal (NYSE: ACI) were among the few that bucked the trend toward declining short interest in leading coal-related stocks between the October 15 and October 31 settlement dates.

The number of shares sold short in Alliance Resource Partners (NASDAQ: ARLP) and Cloud Peak Energy (NYSE: CLD) also increased during the period.

However, short sellers shied away from CONSOL Energy (NYSE: CNX), James River Coal (NASDAQ: JRCC), Peabody Energy (NYSE: BTU), SunCoke Energy (NYSE: SXC), Walter Energy (NYSE: WLT) and Yanzhou Coal Mining (NYSE: YZC).

Alliance Holdings (NASDAQ: AHGP), Rhino Resource Partners (NYSE: RNO) and Westmoreland Coal (NASDAQ: WLB) saw their short interest decline by double-digit percentages during the final weeks of the month.

Below we take a quick look at how Alpha Natural Resources, Arch Coal and Rhino Resource Partners have fared and what analysts expect from them.

See also: Short Interest Rises In Marvell, Falls In Qualcomm

Alpha Natural Resources

Short interest in this Virginia-based company edged up about three percent in the period to about 55.70 million shares. But note that the number of shares sold short represented more than 25 percent of the company's float. It would take almost four days to close out all of the short positions.

The metallurgical coal producer posted a wider net loss for the third quarter, though the loss was smaller than analysts had expected. Alpha Natural Resources has a market capitalization of less than $2 billion. Note that the company's operating margin and its return on equity are both in negative territory.

The consensus recommendation of the analysts surveyed by Thomson/First Call is to hold the shares, and that has been so for at least three months. Note that their mean price target, or where analysts expect the share price to go, is only marginally higher than the current share price.

Over the past month, the share price has risen more than 31 percent, but it is still down more than 17 percent year to date.The stock has outperformed those of competitors Arch Coal and Peabody Energy over the past six months, even though it underperformed the broader markets.

Arch Coal

Short interest in this St. Louis-based company was more than 18 percent of the float at the most recent settlement date, after the number of shares short increased about five percent in the period to 38.95 million shares. The days to cover remained at more than three.

The second-largest U.S. coal producer posted a net loss for the third-quarter that was narrower than expected. The company has a market cap of around $890,000 and a dividend yield of about 2.7 percent. The long-term earnings per share (EPS) growth forecast is about five percent.

The consensus recommendation of the surveyed analysts is to hold the shares, and it has been for at least three months. Yet, their mean price target is about 15 percent higher than the current share price. But note that target is well below the 52-week high reached early in the year.

Shares fell in September in response to new EPA emissions standards, but the share price has edged up almost three percent in the past month. The stock has underperformed competitors such as CONSOL Energy and Peabody Energy, as well as the Dow Jones Industrial Average, over the past six months.

See also: U.S. Airways Sees Short Interest Swell

Rhino Resource Partners

This Lexington, Kentucky-based producer and processor of metallurgical coal saw short interest retreat more than 16 percent in the period to more than 24,000 shares. That more than took back a gain in the previous period. The number of shares sold short represented less than one percent of the float.

Third-quarter EPS from Rhino Resource Partners exceeded consensus estimates. The company offers a dividend yield of almost 14 percent, and it has a market capitalization of about $340,000. The operating margin is better than the industry average, and the return on equity is almost 27 percent.

For the past three months, the consensus recommendation of the three analysts polled has been to hold shares. Only one analyst had a price target, and it suggests about 17 percent potential upside relative to the current share price. However, that target is less than the 52-week high from last January.

Shares have traded mostly between $12 and $13 since late July, and on Thursday were at the bottom of that range. The stock has underperformed not only the broader markets over the past six months, but also larger competitors Alpha Natural Resources and CONSOL Energy.

At the time of this writing, the author had no position in the mentioned equities.

Posted-In: Alliance Holdings Alliance Resource Partners alpha natural resources arch coal cloud peak energy consol energyShort Ideas Trading Ideas Best of Benzinga

 

Related Articles (AHGP + ACI)

View Comments and Join the Discussion!

China Knows Best When it Comes to Investing in the Canadian Energy Sector

3 Reasons Every Family Office Should Own Oil and Natural Gas Stocks