Portfolio Weightings & Performance
Daily In's & Out's of The Coal Trader - Week of Aug. 16, 2021
Weekly Commentary
8/16/2021
I’ve been getting a lot of requests for how I’m positioned and since I’ve been doing well since starting The Coal Trader I thought it best to share how I’m navigating the trading landscape. On one hand I believe establishing a public track record could be a valuable asset and open the door to future opportunities, but on the other hand going public like this puts the ego at risk, opening the door to impostor syndrome instead.
In the end I settled on providing as much value as possible to subscribers. Plus, if I don’t have confidence in myself to be successful investing in coal and mining companies then why am I doing any of this anyway? So here we are.
The plan is to update this article on a daily basis, and I’m going to have it penned to the top of my substack so it’s easy to find. I will have it unlocked only for a week or so for marketing purposes, then it’ll be closed to only the paying tier.
8/17/2021
Tuesday was a rough day for leveraged portfolios. The mid-day sell off whipsawed me out of a couple positions (BTU and AMR calls) in which I needed to protect profits. At the same time I took profits in LYFT which was my only hedge. Towards the end of the day I entered into puts on two oil service providers (NOV and HAL). Although I’m generally bullish on the price of crude oil, I believe N. American drilling and exploration activity will not rebound quickly, therefore these service companies are a decent hedge to my coal exposure. I also entered puts on HBM, which is a copper miner. I think copper looks mid-correction here and could continue to the downside. Copper miners could be another value added hedge for the heavy coal exposure in the portfolio.
8/18/2021
We have to remind ourselves that bull markets don’t go up in a straight line. Coal equities began the day with a sharp rally, only to reverse and get sold off hard with the broad market. I mistakenly chased some BTU calls into the rally, only to have it reverse sharply lower a half-hour later. I used to the opportunity to get back into LYFT puts for a hedge, and trimmed the rest of my call exposure in AMR in order to protect gains. If coal equities don’t hold up relative to overall market indexes I will probably continue to shed leveraged exposure and perhaps even add to hedges.
Overnight, futures are down again and this marks a change in character for the markets. Perhaps everyone is getting squirrely ahead of the Federal Reserve Jackson Hole meeting on Aug. 26-28. Market participants could just be throwing an easy money temper tantrum so the Fed stays dovish. Could the “Taliban Top” really be a thing that persists? I’m not sure but it could be one of those moments we look back on with hindsight and say how the debacle in Afghanistan obviously mattered.
8/19/2021
The selloff continues and my hedges are beginning to act as a stabilizing mechanism, the question becomes when to take profits on the hedges in anticipation of a rebound in core positioning. Friday’s action will go a long way in dictating what to do next. Some of the coal equities are having nice pull backs and I will be looking for tactical buys since the long term trend in these names remains intact fundamentally and technically.
8/20/2021
I noted on Twitter Friday that I’m going to count on the outside chance that this weeks selloff was muted due to options expiration and the potential for it to resume next week is higher than usual. Despite that view, I still believe coal moves higher in the weeks ahead and I’m still chasing strength where I see it in coal equities. On Friday I added some calls in ARCH, that seems to be where the strength is (also BTU) while AMR and possibly METC digest their recent rally’s. I continued to take profits in hedges (LYFT) while layering-in more hedges as I saw fit (MU and HHC).
8/19/2021
8/20/2021
Please let me know if you like these updates and feel it will add value to your own trading and investing by smashing the like button below and share. Also if you’re not a subscriber already and you’d like to continue seeing this content please consider subscribing. Thanks!
Nothing in this Site constitutes professional and/or financial advice, nor does any information on this Site constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. The author of this Site is not a fiduciary by virtue of any person's use of or access to this Site or it’s Content.
BTW- your 23 August week updates are subs-only. Do you plan on making those available to us non-paying scrubs who are shamelessly leaching your good ideas?
Really enjoying your posts! As far as steel goes, any view on the spac LEGO (Algoma)? I have seen lots of smart cyclical and value guys pound the table about this one... thanks a lot!