As I highlighted in the Oct. 17 flash alert, Friday’s the Day, Wildcatters Portfolio holding Peabody Energy (NYSE: BTU) completed the spinoff of its eastern US coal mining assets today. The new company is called Patriot Coal (NYSE: PCX).

For every 10 shares of Peabody you hold, you should receive one share of Patriot with fractional shares of Patriot paid in cash. The spinoff should already be reflected in your brokerage account or at least will be soon.

I haven’t been enamored with eastern-centric coal mining firms in the past. (See the May 2 issue, King Coal, and the Jan. 11, 2006, issue, Playing It Safe, for my general take on the eastern miners.) That view has largely proven correct as companies such as International Coal Group and James River Coal have been chronic underperformers.

However, based on some of the conference calls I’ve heard out of the coal miners during the past few weeks, I’m starting to warm up to high-quality eastern names like Patriot. I’ll outline my rationale in depth in next week’s issue. I’m adding Patriot Coal to the Wildcatters Portfolio as a hold recommendation.

Also note that Peabody Energy, Consol Energy (NYSE: CNX) and MacArthur Coal (Australia: MCC, OTC: MACDF) rate buys under 55, 54 and AUD9.10, respectively.

Also please don’t be fooled by the price action in Peabody today. Shares in Patriot were listed at $35.55 per share. That means that the value of the shares you receive as a Peabody shareholder is a tenth of that, or $3.55 per Peabody share.

Peabody closed yesterday at $55.75 but that included Patriot. Today, once we adjust for the spinoff, yesterday’s close was really $52.20. So if Peabody is trading above $52.20, it’s actually up on the day.

Some data services will likely show that Peabody’s shares are down because they haven’t properly adjusted for that spinoff. Ignore them, and focus on the total value of your stake in Peabody and Patriot.