Crazy Coal Conspiracy Theories

Todd Shriber
 
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For those of us that love a good conspiracy theory, the financial markets offer no shortage of such fare. Think back to the financial crisis when rumors swirled that Bear Stearns and Lehman Brothers were forced out of the business by rampant short-selling on the part of their rivals, who allegedly were also spreading spurious rumors about those banks. Or we could jump back to the days leading up to September 11, 2001 and find some interesting options trades in various airline stocks.

Neither scenario has been proven to be tied to the subsequent outcome, but as long as folks enjoy reading about a good conspiracy theory, these situations will live on for generations to come to read about. Today, there is another conspiracy being touted and it comes courtesy of Massey Energy (MEE), the largest coal miner in Central Appalachia.

Even if you are just a casual follower of the coal sector, by now you probably know that Massey's safety record is not one deserving of a gold star. Frankly, Massey's safety record makes BP (BP) look excellent by comparison. The blast at Massey's Upper Big Branch mine in West Virginia just days before the Deepwater Horizon exploded last April resulted in 29 deaths and was the worst blast at a U.S. coal mine in nearly four decades.

Massey's shares predictably plunged and then experienced a sharp rebound as resources stocks came into favor in the latter half of last year and takeover rumors swirled. Alpha Natural Resources eventually said in January it would acquire Massey for $7.1 billion.

So all should be hunky dory at Massey, right? No sir. According to court documents, Massey alleges government officials, including President Obama himself, conspired to destroy the company after the Upper Big Branch blast. What makes this accusation all the more rich is that Massey Chairman Bobby Ray Inman is a former CIA deputy director. In other words, he might just know a little something about conspiracy theories.

Here is where the charge that the President would want to wreck Massey loses plenty of merit. Say what you choose about him, but the President is not a stupid man. West Virginia, while not home to the treasure trove of electoral votes that are found in California or Texas, is now a swing state after spending generations being a reliable win for one particular party.

The President did not win West Virginia, home to hundreds if not thousands of Massey employees, in 2008. In a close race though, West Virginia's five electoral votes become quite important. The margin of victory in the electoral college in 2000? Five.

What is really going on here is that Massey is trying to cover up its slack safety reputation with wacky allegations. While studying the company in preparation for a bid, Alpha officials found that ''the Massey culture is driven by a strong focus on production and its associated components, with the other facets of the operations such as employee safety and regulatory compliance receiving minimal consideration,'' Bloomberg News reported, citing the court filings.

Perhaps fortunately for Massey employees and investors, Alpha Natural (ANR) is proceeding with its acquisition and that will rid the market of this cooky coal company. The coal sector might be all the better for it.

Todd Shriber

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