I was just looking at the Natural Gas message board (UNG) and big topic of discussion by the natural gas shorts is gas to coal switching.
Since natural gas is at an 18 month high now and threatening to break $4 any day, the natural gas shorts argue that the price of natural gas cannot stay above $4 because the utilities will switch from gas to coal.
On the JRCC message board, the shorts keeps saying that there is no relationship between the prices of natural gas and coal and any switching will take a year to impact JRCC which coincides with their timeframe for bankruptcy.
The facts are that the utilities will switch to coal this summer during peak electrical generation season if the natural gas price is above $3.50 mm/BTU. At $4 natural gas there will be massive switching and coal prices will increase.
The current short attack is to get your JRCC shares at low prices before the gas to coal switching is plain for everyone to understand probably in May 2013.
If you are a day trader, the current JRCC action is great, but if you are an investor buying now and waiting for a big turnaround in the coal stocks this summer should be a better game.
Well, according to JRCC's CEO, on the last CC, CAPP coal (i.e. JRCC) will need to see 4.50 pricing on NG before any switching will occur into Eastern coal. PRB coal is already in the money for a switch. We simply own the wrong coal company ! That is why JRCC's price is not going up; the coal market in Central Appalachia is betting that NG is now peaking out around 4 bucks ????? We shall see.
I am still holding; at this point see no reason to sell. I also hold ACI (at this point, a much better play than JRCC in the near term. Longer term, JRCC will have its day IF...IF it can export is sulfur-laden coal to China and/or India). In the meantime, unless its books are cooked (I don't think they are), JRCC should have plenty of resources to service its interest on debt, especially with the cost reductions they have put into place. JRCC does not have the legacy cost problem that PCX had.
JRCC stock price is now under control of short hedge funds and daytraders.
All we hear on this message board are:
1. The JRCC price is truth even though it is being heavily manipulated by short hedge funds
2. Fear mongering with every other post about bankruptcy
Some day soon the tide will turn for JRCC, the shorts will cover, and move on to new prey.