3. SunCoke Energy, Inc. (NYSE:SXC)
Number of Hedge Fund Holders: 15
Share Price as of August 17: $7.06
SunCoke Energy, Inc. (NYSE:SXC) operates as an independent producer of coke. The firm is trying to build a dividend profile in line with other coal miners. On August 2, the company declared a quarterly dividend of $0.08 per share, an increase of over 33% compared to the previous dividend of $0.06 per share. The forward yield was an attractive 4.38%. The dividend is payable to shareholders by early September. The firm was founded in 1960 and is based in Lisle, Illinois.
On August 2, SunCoke Energy, Inc. (NYSE:SXC) posted earnings for the second quarter of 2022, reporting earnings per share of $0.21, missing market estimates by $0.02. The revenue over the period was $501 million, up 37% year-on-year.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in SunCoke Energy, Inc. (NYSE:SXC), with 2.9 million shares worth more than $26 million.
At the end of the first quarter of 2022, 15 hedge funds in the database of Insider Monkey held stakes worth $60 million in SunCoke Energy, Inc. (NYSE:SXC), compared to 16 in the preceding quarter worth $63 million.
In its Q4 2021 investor letter, Steel City Capital, an asset management firm, highlighted a few stocks and SunCoke Energy, Inc. (NYSE:SXC) was one of them. Here is what the fund said:
“SunCoke Energy, Inc. (NYSE:SXC) owns five cokemaking facilities in the U.S. capable of producing 4.2 million tons per annum (mtpa) of blast furnace coke. Coke is a key raw material used in the process of producing steel via the blast furnace method. In addition to its cokemaking operations, SXC owns a collection of marine terminals, the largest of which is the Convent Marine Terminal (CMT) in Louisiana. CMT has the capacity to transload 15 mtpa of coal and other industrial materials. In 2020, CMT accounted for 55% of U.S. thermal coal exports from the U.S. Gulf Coast and 15% of total U.S. thermal coal exports.
While the broader steelmaking industry recently benefitted from all-time high steel prices, resulting in record production levels, growing cash flow, and improving balance sheets, SXC has continued to trade with a free cash flow yield in excess of 20%, reflecting considerable concern about the company’s prospects. I believe there is a broad misunderstanding of the SXC story driven in part by shallow analysis of the company’s business model and cash flow prospects. I believe fair market value ranges from $14-$17, representing upside of 84-122% from current levels. What’s more, SunCoke Energy, Inc. (NYSE:SXC) represents an attractive takeout target for industry-consolidator Cleveland Cliffs (CLF), which at a minimum provides downside protection, but also offers a potential catalyst for value realization in the future. ” (Click here to see the full text)
