Shares of the Market Vectors Coal ETF (NYSE:
), the largest of the two
devoted to coal equities, plunged following the results of
Tuesday's U.S. presidential election. On volume that is already
well above triple the daily average, KOL is off nearly six
percent with more than four hours still to go in Wednesday's
Some traders loaded up on KOL and its constituents in advance
of the election,
anticipating an upset of President Obama by
Republican challenger Mitt Romney
. Throughout his first four years in office, President Obama has
been a vocal supporter of alternative energy. Romney sought to
exploit that rhetoric to his advantage by framing himself as a
strident supporter of coal as a fuel source.
Romney was seen as a coal bull in his effort to capture
precious electoral votes in Pennsylvania, a major coal producing
state. That gambit failed as the Keystone State was carried by
the President, marking the fifth consecutive presidential
election in which the state has backed the Democratic
KOL's Wednesday tumble extends a precipitous 2012 slide for the
ETF. Traders punished KOL and marquee holdings such as Peabody
) for much of this year as U.S. electric utilities turned to
cheaper, cleaner natural gas over coal. With U.S. production of
natural gas resting near all-time highs and supplies abundant,
some coal bears saw long-term fundamental blow to coal equities
and ETFs such as coal.
put in a bottom just below $22 in September
and steadily moved higher as polls showed a potentially tight
race looming between Obama and Romney. In the month leading up to
election, the ETF surged nearly nine percent.
Six of KOL's top-10 holdings, including its largest individual
holdings, are non-U.S. companies, but that is not insulating the
ETF from savage losses today. Shares of Consol Energy (NYSE:
) and Peabody, the largest U.S. coal producer, are off six
percent and 9.5 percent, respectively. Those two stocks combine
for over 14 percent of KOL's weight.
Mining equipment maker Joy Global (NYSE:
) and Walter Energy (NYSE:
), two names that have been rumored to be takeover targets, are
off 3.8 percent and eight percent, respectively.
While KOL is the coal ETF that garners the most attention, it
does have a smaller rival in the form of the PowerShares Global
Coal Portfolio (NASDAQ:
). PKOL, which had just $10.1 million in assets under management
at the start of trading today, is down 5.5 percent on volume that
is nearly quadruple its daily average.
Like KOL, PKOL has several non-U.S. companies among its top-10
holdings, but Peabody, Consol, Alpha Natural Resources (NYSE:
) and Arch Coal (NYSE:
) combine for over 23 percent of the ETF's weight. Alpha
Natural's 12 percent slide today means the stock is now off
nearly 59 percent this year. Arch is down 13 percent, extending
its year-to-date tumble to 48 percent.
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