International Coal Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of coal producer International Coal (NYSE: ICO  ) plunged as low as 16% in early Tuesday trading on news that two of its largest shareholders plan to sell nearly 35 million shares of the company.

So what: Unfortunately for International Coal bulls, the unloading whales are none other than Prem Watsa (through Fairfax Financial) and Wilbur Ross (through WL Ross & Co.), two of the smartest stock sharpies around. Each investment great will continue to own about half of their respective stakes, but International Coal's hot stock price, coupled with today's news, has Mr. Market questioning just how much fuel the stock has left.

Now what: I'm a believer in following the smart money, so I'd be inclined to stay away from International Coal right now. While the stock sales aren't dilutive and International Coal's total number of outstanding shares will not change, I'm interpreting the news as a signal that the stock's 100% return over the past year is simply overdone. Watsa, of course, is most famous for making Fairfax billions in a big bet against the U.S. housing market, so I wouldn't exactly want to be buying what he's selling.

Interested in more info on International Coal? Add it to your watchlist.

Fool contributor Brian Pacampara owns shares of Fairfax. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


Read/Post Comments (0) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 1399595, ~/Articles/ArticleHandler.aspx, 4/19/2014 6:14:45 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement