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HoHoHo: Next bet for value investor

In Energy, Temasek on 24/03/2016 at 10:03 am

Will Temasek try its luck and put our chips here? What will Buffett do?

One reason why the coal industry is in such a bad shape is that US utilities are using more natural gas which is cheaper than thermal coa.

NYT Dealbook on the coal industry:

BANKS PULL FINANCING FROM COAL INDUSTRY Wall Street’s retreat from the coal industry is an ominous sign for a sector already in decline, Michael Corkery writes in DealBook. JPMorgan Chase said it would no longer finance new coal-fired power plants in the United States or other wealthy nations. Bank of America, Citigroup and Morgan Stanley have made similar decisions. At the same time, Peabody Energy, the world’s largest private-sector coal company, said it might have to follow three other large coal companies into bankruptcy.

Coal has had periods of boom and bust before, but some say this may be a permanent shift for the industry that helped drive Wall Street profits during the 19th and 20th centuries.

Banks say they are trying to do their part against climate change, but the retreat is driven by a more basic reason: Lending to coal companies is risky and could prove unprofitable. Coal companies are under pressure from less expensive energy sources and tougher regulations. As a result, even the most secure loans are off limits for many banks.

Even hedge funds and private equity firms, usually eager to pounce on companies in distress, do not have the stomach for the coal industry.

In the oil industry, however, investors are snapping up debt and equity from troubled companies, in expectation of a rebound.

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