5 Long-Term Stock Picks of Skylands Capital

3. Arch Resources, Inc. (NYSE:ARCH)

Value of Skylands Capital‘s 13F Position: $45.2 million

Number of Hedge Fund Shareholders: 45

Arch Resources, Inc. (NYSE:ARCH) is one of Skylands’ newer holdings in terms of the stocks on this list, dating back to Q4 2016, when the company first landed on the stock market. ARCH shares have gained 109% in the nearly six years since its public debut. Skylands cut its stake in ARCH by 14% during Q2, leaving the fund with 316,070 shares.

Arch Resources, Inc. (NYSE:ARCH) achieved record net income during Q2 on the strength of record coke realizations and margins. Revenue for the quarter hit $1.13 billion, while EPS was $19.30. The company is using its net income gains to strengthen its financial position and reward shareholders, paying down $136 million in debt during the quarter and raising its authorization for share repurchases to $500 million.

Nordstern Capital shared its bullish take on Arch Resources, Inc. (NYSE:ARCH) in the fund’s Q2 2022 investor letter:

“‘It’s atypical for a company with our cash-generating capabilities to have such modest cash requirements’ – Paul Lang, CEO Arch Resources Inc

This statement sounds like it came from a mature capital-light software giant. However, those are the words of the CEO of an American coal mine operator trading at 2-times free cashflow with a 25% forward dividend yield and a massive share buyback program. Not everything is rosy in coal investor land. ARCH struggles with persistent rail and shipping issues. In the first quarter ARCH only sold about 16% of the met coal tonnage that management expects to sell throughout 2022. The company received only 60% of the required train capacity. Management cited inadequate rail service as the single biggest challenge. However, ARCH delivered record quarterly net income regardless…” (Click here to see the full text)