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Sally Jones
Sally Jones
Articles (580) 

Steve Cohen - Hot for Coal, Adds WLT

March 27, 2013 | About:

On March 22, 2013, Steve Cohen, founder of SAC Capital Advisors, added to his position in Walter Energy Inc. (WLT) by 101.14% , listing current shares at 3,348,472, with current price of $28.03, a change from average down 5%. An intuitive billionaire hedge fund investor, Cohen is considered one of the most successful traders in the world. At the end of December 2012, SAC Capital’s portfolio shows 1,581 stocks at a total value of $17.26 billion. SAC portfolio’s top sectors are weighted with EFT, options, preferred 29.8%, consumer cyclical 20.6%, energy 10.2% and healthcare 8.6%.

Walter Energy Inc. is a producer of metallurgical coal, also called “coking coal,” for the global steelmaking industry. The company also produces thermal coal, anthracite, metallurgical coke and coal bed methane gas. Walter Energy employs approximately 4,100 employees and contractors with operations in the U.S., Canada and UK. The company has mining operations in West Virginia and Alabama, as well as surface mines in Northeast British Columbia (Canada) and underground and surface mines in South Wales (UK). Walter Energy Inc. has a market cap of $1.75 billion. It has a P/E ratio of 7.5, a P/B ratio of 1.8 and a P/S ratio of 0.7322.

With share price down 54% from last year, WLT may be influenced by changing demands for metallurgical coal from steelmakers as well as domestic gas prices. According to Bloomberg, coal markets could be weak for the first half of this year. As a source of heat and a chemical reducing agent, metallurgical coal is used in blast furnaces to smelt iron ore and produce intermediary pig iron, after which it is further refined into steel.

As of the quarter ending Dec. 31, 2012, gurus Steve Cohen, John Burbank, John Keeley and Chuck Royce made buys or added to their WLT position. Prior to that, Jean-Marie Eveillard, Paul Tudor Jones, Jim Simons and Leon Cooperman all sold out in the quarter ending Sept. 30, 2012. See how other investor gurus are trading WLT.

Steve Cohen’s holding history:

GuruFocus performed a thorough financial and performance checkup on Walter Energy Inc. and found the following warning signs: The company has a low Piotroski F-Score of 2, which usually implies poor business operation. Walter Energy Inc.’s gross margin has been in long-term decline, and the company’s operating margin has also been in a five-year decline. Also, the company’s assets are growing faster than its revenue. The company shows a buildup of inventory, which may mean it is having difficulties selling its goods. North American coal companies are having to sell to Europe where coal is still in demand. Finally, Walter Energy Inc.’s revenue has been in decline over the past 12 months.

Two good signs are that the WLT stock dividend yield (1.7%) is close to three-year high of 1.72%, and the stock’s P/E ratio (8.7) is close to a three-year low of 8.7.

Steve Cohen’s top buys, sells and holdings:

About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

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