Alpha Natural Resources, Inc. (OTCMKTS:ANRZ) Bounces In Spite Of Bashers
Alpha Natural Resources, Inc. (OTCMKTS:ANRZ) made a spectacular 34.11% recovery yesterday, in spite of the torrent of negativity issued by a popular online stock commenter.
SeekingAlpha author WYCO Researcher had a lot of discouraging things to say about ANRZ, including but not limited to the assertion that the company has “75% chance of bankruptcy and only a 25% chance that the notes will be paid”.
Even though it criticized the market’s negativity, the article itself painted quite the grim picture. So why did the ticker make such a spectacular recovery all of a sudden? Was the picture not accurate?
There are no easy answers to those questions, as ANRZ is not your regular everyday dubious OTC Markets pinksheets penny stock company.
Although it ended up on the pink tier after dropping out of the NYSE, ANRZ is still operating on a scale far surpassing the regular denizens of this exchange. True, up to this point in time, OTC Markets investors haven’t really treated it with more kindness than NYSE investors, but few of the traders that spare it a second’s thought fail to see that it represents an almost unique opportunity for both opportunists and supporters alike. Why?
Even after the company’s staggering jump yesterday, its market cap remains as low as $5.2 million. Just for scale – American Green Inc (OTCMKTS:ERBB), a dubious and now – out-of-favor – penny stock pink sheets company that is now on the wane, because it has given its investors nothing but false promises and disappointments, is currently valued at $11 MILLION.
While at first glance this comparison may seem like comparing apples to oranges, it does a fine job of illustrating just how ridiculously low ANRZ‘s market cap is. Mind you, we’re still talking about a fully functioning entity that makes tens of millions of dollars of profit per quarter.
These facts, combined with the volatility and fickleness of the OTC Markets can make for some very interesting chart movements, as yesterday’s amazing bounce demonstrated.
Needless to say, both long term investors and opportunistic traders ought to be extra careful when dealing with stock as volatile as ANRZ‘s, as the same forces that flung the ticker upwards unpredictably yesterday can tear it down without a moment’s notice at any time.