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 Arch Resources, Inc. (NYSE:ARCH), in the second quarter 2024 investor letter. Arch Resources, Inc. (NYSE:ARCH) engages in the production and sale of metallurgical products. The one-month return of Arch Resources, Inc. (NYSE:ARCH) was 1.43%, and its shares gained 40.99% of their value over the last 52 weeks. On July 9, 2024, Arch Resources, Inc. (NYSE:ARCH) stock closed at $161.28 per share with a market capitalization of $2.922 billion.
Black Bear Value Partners stated the following regarding Arch Resources, Inc. (NYSE:ARCH) in its Q2 2024 investor letter:
“Arch Resources, Inc. (NYSE:ARCH) and Warrior 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)
A coal miner working in a surface mine, wearing a hard hat and carrying a pick.
Arch Resources, Inc. (NYSE:ARCH) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 38 hedge fund portfolios held Arch Resources, Inc. (NYSE:ARCH) at the end of the first quarter which was 44 in the previous quarter. In Q1, Arch Resources, Inc.’s (NYSE:ARCH) core metallurgical segment reported an adjusted EBITDA of $103 million, generated $83 million in discretionary cash flow and delivered a $56 per ton cash margin. While we acknowledge the potential of Arch Resources, Inc. (NYSE:ARCH) 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 Arch Resources, Inc. (NYSE:ARCH) 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.
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