Some investors seem to see a light at the end of this long dark energy-trading tunnel after all. Several of these beaten-down stocks, led most notably by Williams ( WMB), have rallied in recent weeks as the worst of their liquidity worries passed. In some cases the companies, by raising needed cash and posting solid operating results, have even begun to reverse a bad-news cycle that drove their once-highflying shares into the low single digits. For its part, Williams delighted investors Wednesday with upbeat profit forecasts for core segments outside its flailing energy trading unit. The stock, down more than 90% over the last year, jumped 29% as value hunters hoped to cash in on the panic caused earlier this summer by the persistent rumor that the company was headed for a massive restructuring. The rally comes even as some observers say the bigger picture continues to look ugly for the energy traders. "They gave an encouraging presentation," said John Olson, an analyst at Sanders Morris Harris who doesn't own the stock. "They're still like the Vatican -- asset-rich and cash-poor -- but it looks like they will rise and fight again."
The filing showed that Williams pledged virtually all of its midstream natural gas and liquids assets to secure a $1.1 billion credit facility provided by Citigroup ( C). The company had earlier disclosed that its valuable Barrett Resources assets, purchased for this year for $2.8 billion, are securing a $900 million credit line provided by Lehman Brothers and a unit of Warren Buffett-led Berkshire Hathaway ( BRKA). "I think this company has pledged more than a college student who's sworn allegiance to the flag every day from the first grade on," said Fredric E. Russell, whose Tulsa investment firm owns nearly 200,000 shares of the stock. Russell has long voiced criticism about Williams, saying the company is unresponsive to shareholders and unwilling to own up to its mistakes. Williams needs to address these matters, Russell said, if it hopes to win back the market and fuel the current rally. "Nothing would please investors more than for Williams to work diligently to be crystal clear in its press releases and its numbers and stop blaming the media for all of its problems," he said.