Friday, May 13, 2011

ANR - Can't Resist

Fortunately, we had sold all of ANR at $55 because it has been plummeting ever since.

That fall could be explained by less than stellar earnings, a general market move away from the commodity trade, concern of a slowing global economy reducing coal demand, dollar fluctuations, hedge funds trying an "arb" play on the pending merger (that would be my best guess) or.......sun spots (that's an attempt at humor).

In any event, this still seems like an attractive price point, and I couldn't resist anymore. Bought a lot of ANR towards the end of Friday at $48.50.

Worse case - In wall street lingo...I could be catching a falling knife. However, with earnings estimates actually increasing after earnings (to approx. $5 in 2011 and $6 in 2012) it seems like valuation has to take hold at some point.

Best Case - Hopefully the oversold RSI will draw this back to the 200dma of about $50 in the short term. Also, the implied volatility for the options remain high. If the stock does bounce, a short term covered call opportunity should present itself early next week.

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