Patriot Coal Rides the Rocket Again -- Short Covering?
Coal miner Patriot Coal Corp. (NYSE: PCX) continues to skyrocket again today, taking up where it left off on Tuesday when the shares gained more than 32%. The stock is up another 35% today.
The stock’s rise on Tuesday was at least partially the result of a report at Bloomberg News that demand for coal was on the rise in Europe. Patriot’s main operations are in Appalachia and access to East Coast ports for export to Europe drove Tuesday’s price hike. Competitor James River Coal Co. (NASDAQ: JRCC) is also up another 16% today, following a rise of about 10% on Tuesday.
Today’s action in Patriot’s shares could be due to short covering. More than 28% of the company’s shares were being held short as of June 15th, and short interest that didn’t cover on before the holiday are probably doing so today.
Miners Arch Coal Inc. (NYSE: ACI), Alpha Natural Resources Inc. (NYSE: ANR), Peabody Energy Co. (NYSE: BTU), Walter Energy Inc. (NYSE: WLT), Consol Energy Corp. (NYSE: CNX), and Cloud Peak Energy Inc. (NYSE: CLD) are also up today, but by a more modest 1%-3%. The rise probably reflects a belief among investors that the coal market has reached a bottom.
Still the jump in Patriot’s shares is impressive, even if the current price of $2.59/share remains about -90% below the stock’s 52-week high of $24.99. Volume is more than 21 million shares for a stock that averages about 10 million shares traded daily.