Black Bear Value Partners, an investment management firm, published its first quarter 2024 investor letter. A copy of the letter can be downloaded here. Black Bear Value Fund returned -6.7% in June and is up +2.1% YTD and the S&P 500 returned +3.6% in June and +15.3% YTD. HFRI Value Index returned -0.3% in June and +4.3% YTD. The businesses, the firm owns are attractively priced, have solid balance sheets, and are managed effectively. 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 second 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 5.31%, and its shares gained 69.76% of their value over the last 52 weeks. On July 9, 2024, Warrior Met Coal, Inc. (NYSE:HCC) stock closed at $68.65 per share with a market capitalization of $3.59 billion.
Black Bear Value Partners stated the following regarding Warrior Met Coal, Inc. (NYSE:HCC) in its Q2 2024 investor letter:
“ARCH and Warrior Met Coal, Inc. (NYSE:HCC) are 2 of the leading U.S. producers of high-quality metallurgical coal (“met coal”). This is the kind of coal used for steelmaking. ARCH also has a small thermal coal business that contributes ~20% of their earnings. Each company is independently a top 5 position meaning met coal is a meaningful percentage of our assets.
Both companies are largely export driven producers. For example, Warrior exports 97% of their production. Both have a large cost advantage as they can ship to Europe and South America in ~2 weeks versus Australian competition of ~5 weeks.
Met coal demand is projected to climb for the next 25 years, driven by the economic development and urbanization in India and the rest of Southeast Asia. ~60% of the world’s population lives in Asia, where met coal demand is centered and where local sources are limited. Over the coming years demand will likely outstrip supply, leading to higher prices. There has been a severe lack of investment in met coal due to ESG concerns with investment peaking in 2014…” (Click here to read the full text)
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 31 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held Warrior Met Coal, Inc. (NYSE:HCC) at the end of the first quarter which was 25 in the previous quarter. In the first quarter, Warrior Met Coal, Inc. (NYSE:HCC) reported a net income, on a GAAP basis, of $137 million or $2.62 per diluted share compared to a net income of $182 million or $3.51 per diluted share in Q1 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.
We discussed Warrior Met Coal, Inc. (NYSE:HCC) in another article and shared the list of best coal mining stocks to invest in. In addition, please check out our hedge fund investor letters Q2 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.
