Arch Coal Inc. (ACI-N)

A very contrarian stock. A lot of coal companies are on his Watch list. Unfortunately, most of them are in very, very scary positions. The regulatory environment has changed and the attitude towards coal has gotten far more against it. They had a $1.8 billion debt load in 2010 and it is now over $5 billion. Tried to do a deal with note holders but they said No. He sees Chapter 11 for this company, so anybody investing in it is taking a tremendous chance.

He is looking at the coal sector. The major problem with these companies is that they have awful balance sheets. It is hard to predict which will survive. It could also end up having tremendous returns.

Coal space is going to be challenged for a while. No bullish catalyst coming any time soon. The Gas / Coal debate will rage for years. It is making a bottom and you would want to take advantage of pullbacks to accumulate but there is no rush.