Walter’s Woes Plague Coal ETF

ETF Trends

The Market Vectors Coal ETF (KOL) is probably glad it is Friday. Already dealing with a string of daily losses that sent the ETF below its 50- and 200-day moving averages several months ago, KOL is on the cusp of a 5% weekly loss after falling to yet another 52-week low earlier Friday.

Although it accounts for less than 2% of KOL’s weight, Walter Energy (WLT) is one of the primary reasons KOL has made a new low today and it was not just a 52-week low. KOL looks ready to close below $19, which would represent its lowest levels in more than four years.

Earlier this week, we highlighted the fund’s struggles, noting on Thursday that it is hard to envision things getting noticeably better for KOL anytime soon. For example, Peabody Energy (BTU), the ETF’s fifth-largest holding with a weight of almost 6%, has closed lower for nine consecutive days. Consol Energy (CNX), KOL’s largest holding at weight of 10.3%, has closed to the downside in six of the last seven trading sessions. [KOL's Collapse Turns Nasty]

Things got worse not better Friday when it was reported Walter pulled a financing plan. Citing market conditions, Walter pulled a planned $1.55 billion credit refinancing, Reuters Loan Pricing Corp reported on Friday, citing sources.

That sent the shares down 17.4% on volume that was more than triple the daily average. At this writing, the stock was halted on the New York Stock Exchange. Walter is also a heavily shorted stock as short interest in the name rose 14% to to about 17.05 million shares for the May 15-May 31 period. Just over 24% of the stock’s float is sold short, according to Finviz data.

With Walter falling and then halted, KOL sank 2.6% on volume that was more than double the daily average. Weakness in Walter today and other components such as Joy Global (JOY) and Peabody Energy (BTU) over the past several weeks has sent KOL down 12% in the past month. Over the same time, the S&P 500 is down just 1%.

Market Vectors Coal ETF

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ETF Trends editorial team contributed to this report.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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