Peabody is a global coal producer with operations in North America & Australia and is about 10% smaller than Whitehaven Coal (WHC) from a market capitalisation perspective. Inline with our bullish stance towards Coal over the coming 12 months, we are bullish on Peabody, however, we will review their quarterly update set to be released on the 27th of April before potentially adding it to the portfolio. We do have coal exposure in the portfolio via Glencore (GLEN LN), however, this is more diversified in nature. GLEN has proposed an all-share merger between itself and Teck, with a simultaneous demerger of the combined coal businesses, however, it seems there may be others that also see the rationale of such a deal and could join the fray. We are of the opinion that Coal exposure for the portfolio may be better serviced through a pure-play operator, rather than a diversified global player who has flagged their desire to instigate deals.
MM is bullish BTU US ~$US26.00
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