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The Black Swan that is Walter Energy $WLT

Walter Energy (NYSE:WLT) is a metallurgical coal company suffering a number of indignities. It is one of the most shorted stocks on NYSE. Some people call that bullish. The steel business has not been buying as much and Walter has been in a big cost reduction campaign. They just cut their dividend down to a penny per share. That way they keep the track record of always paying dividends.

The stock is trading around its 52 week low and several credit downgrades are starting to fly around like flies on you know what. Its pension obligations are almost equal to its market cap. the lending agreement has just been renegotiated with the decrease in dividend conserving some cash for debt repayment.

Generally the street does not like this stock. Generally the street is wrong. All you need is one strategic investor such as an end-user who may wish to buy out the company because of the reserves and watch the stock run.

This is a long position waiting to be filled. Most insider trading activity is a buy. Stock also trades on Toronto Stock Exchange which helps tax deferred investors and funds with limitations as to foreign exposure.

George Gutowski writes from a caveat emptor perspective. Follow him on Twitter @financialskepti