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The largest U.S. coal producer is going bankrupt…
Bloomberg reports Peabody Energy Corp. (BTU) missed a $71 million semiannual bond payment last Tuesday. It has a 30-day grace period to pay investors—but it’s doubtful.
Peabody informed the Securities Exchange Commission (SEC) it may require Chapter 11 bankruptcy protection.
A combination of cheap natural gas (a coal alternative) and a hostile administration has pummeled the domestic coal industry.
BTU’s stock used to be worth over $1,000 per share. It now trades for just $2.54.
That’s a 99.77% wipeout over the last five years.
It’s a powerful reminder of why PBRG’s No. 1 rule of investing is “never lose money.” We ensure this never happens by maintaining strict stop losses on our positions.
A 25% stop out on a bad trade never feels good… but it feels a heck of a lot better than a 99% blowout.
Bottom line: Read and follow PBRG’s risk-management protocol. Don’t even think of investing in these markets without it.