Saturday, March 16, 2019

Another coal investment, another potential bankruptcy

Sup, value investing hombres. Welcome back to another article on how the Greedy Dragon gets bent over and fucked by Mr. Market. So, Cloud Peak Energy (CLD) released their annual report, which revealed that it now has “substantial doubt about its ability to continue as a going concern” a.k.a we might be filing for bankruptcy.

This especially hurts because I already saw my holdings in Alpha Natural Resources go to zero a few years back when it filed for bankruptcy back then. I just didn’t see bankruptcy happening for CLD. No doubt things were pretty rough, but I didn’t expect things to get so dire just after a few bad quarters.

Update on the Greedy Dragon Portfolio: Since my last article on January 6, I sold all 150 of my shares in Skechers at USD32.23 per share. I also bought 770 shares in Northern Oil & Gas at USD2.47 per share, as well as 350 shares in Oasis Petroleum at USD5.65 per share.

Now, I don’t know if CLD will definitely file for chapter 11 bankruptcy, they might get bought out or get new financing or something. But I have no intention of sticking around to find out. On Monday, I will try to sell my entire position in the stock and save what meager capital I can from this position. The company has been bleeding cash and may face a liquidity crisis forcing it to resort to bankruptcy and wiping out existing shareholders.

I will probably look back at this fuck up one day and analyze where it all turned to fucking ash. But here are some of the probable contributing factors to this clusterfuck:

Arrogance: I have held on to a number of investments that plunged precariously, only for them to rebound and for me to profit from dollar-cost averaging (including CLD a few years back). I was too optimistic in believing that things would always work out in the end, perhaps this optimism and complacency hampered my ability to see the situation for what it really was.

It is also likely I didn’t want to admit I made a mistake, and therefore dismissed CLD’s symptoms as a cold when it was actually stage 4 penis cancer.

Shitty Industry: The shutting down of significant coal-based power plants in the US has turned coal mining into a very challenging industry, especially considering the high fixed-costs of coal miners. I should have taken Warren Buffett’s advice to steer clear from industries with poor economics. It don’t matter how much I learn about investing if I don’t digest and apply the knowledge. I guess I’m still a moron after all these years.

Termination of credit facilities: I should have recognized it as a warning sign when CLD terminated its credit facility a few months back, and not replaced it with a new one. Either no one was willing to lend them money, or the facility would come with very high interest rates and covenants.

Use the fucking technology: While unrelated to CLD, I always just tell my remisier what I wanna buy and sell and he helps me make the trade. I therefore have no power to buy or sell once office hours is over in Malaysia. I wanted to sell all my CLD shares when I read their annual report Friday night Kuala Lumpur time (aka morning New York time), maybe I would have salvaged some capital if I sold early in the trading day. Now I’m afraid that I might get back close to nothing. I gotta sign up for an Interactive Brokers or something in future that lets me trade foreign markets anytime.

I guess I’m gonna go get some food now to try and make myself feel a little less like a pendejo. Thank you


  1. did you stop blogging? got your house?

    1. Hi Goks, was studying for my CFA exam so I stopped for awhile. Yeah bought my house in KL. Will try to start blogging soon