Black Bear Value Partners, an investment management firm, published its fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. Black Bear Value Fund returned -9.4% in December and -1.4% in 2024 and the S&P 500 returned -2.4% in December and +25.0% in 2024. HFRI Value Index returned -1.2% in December and +11.5% in 2024. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Black Bear Value Partners highlighted stocks like Warrior Met Coal, Inc. (NYSE:HCC), in the fourth quarter 2024 investor letter. Warrior Met Coal, Inc. (NYSE:HCC) produces and exports non-thermal metallurgical coal for the steel industry. The one-month return of Warrior Met Coal, Inc. (NYSE:HCC) was -7.09%, and its shares lost 15.47% of their value over the last 52 weeks. On January 14, 2025, Warrior Met Coal, Inc. (NYSE:HCC) stock closed at $53.45 per share with a market capitalization of $2.796 billion.
Black Bear Value Partners stated the following regarding Warrior Met Coal, Inc. (NYSE:HCC) in its Q4 2024 investor letter:
“Warrior Met Coal, Inc. (NYSE:HCC) was down 22% during the month of December, likely for similar reasons that ARCH/CEIX sold off. Similarly to BLDR, CEIX, and ARCH we used this weakness as an opportunity to buy more stock.
Please reference the met coal discussion above, as it applies to Warrior Met Coal. Currently the bulk of HCC’s FCF is being invested in a capital project that will be concluding this year. Once the business winds down their investment period they will gush cash.
Rough math on HCC looking out 2 years from now (vs. a $54 year-end stock price)
- Accumulated FCF net of liabilities: $14-$23 per share • The existing business generating between $6-$10 in FCF o Let’s presume non-heroic FCF yield of 15% which comes to $40-$67 per share • A low-cost/best-in-class new asset (Blue Creek) that is worth $7-$18 a share using 15% FCF yield • $67-$118 vs. a year-end price of $54–using a 15% FCF yield
Like the prior discussion, the above is a very rough calculation and shows the wide margin of safety baked in the price. I believe the operating business should command a better valuation implied by a 15% FCF yield…. but for now, we do not have to make any big leaps with respect to valuation.”
An aerial shot of the Brookwood, Alabama landscape, with coal processing plants in the background.
Warrior Met Coal, Inc. (NYSE:HCC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 34 hedge fund portfolios held Warrior Met Coal, Inc. (NYSE:HCC) at the end of the third quarter which was 33 in the previous quarter. Warrior Met Coal, Inc. (NYSE:HCC) reported net income on a GAAP basis of $42 million or $0.80 per diluted share in the third quarter of 2024, compared to net income of $85 million or $1.64 per diluted share in Q3 2023. While we acknowledge the potential of Warrior Met Coal, Inc. (NYSE:HCC) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Warrior Met Coal, Inc. (NYSE:HCC) and shared Black Bear Value Partners’ views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q4 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.