Wouldn't Mimic This Insider Buy

Arch Coal's (ACI) shares have slid 60% in the past year amid weak demand in both metallurgical and thermal coal. Metallurgical coal is used in steel production, so demand here has been heavily affected by poor macroeconomic conditions, most notably in Europe. Meanwhile, the burgeoning natural gas market over the past year or two has grabbed market share from thermal coal, a leading fuel for power plants.

Still, company board member Douglas Hunt recently bought 8,000 shares of Arch at an average price of $5.54, upping his direct stake to 30,000. On average -- though not always -- insider buys tend to be bullish signals, since insiders thereby increase their exposure even further to any company-specific risks. As a result, these moves would seem to indicate the potential for high returns ahead. With Arch closing in on its $5.26 low from July, Hunt apparently believes the market is not correctly anticipating the likelihood of a recovery....480 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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