Black Bear Value Partners, an investment management firm, published its second-quarter 2025 investor letter. A copy of the letter can be downloaded here. Black Bear Value Fund returned -3.0% in June and -10.5% in the quarter, and -11.7% YTD. The S&P 500 returned +5.1% June, +10.9% in the quarter, and +6.2% year-to-date. HFRI Value Index returned +3.1% in June, +7.7% in the quarter, and +7.1% year-to-date. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its second quarter 2025 investor letter, Black Bear Value Partners highlighted stocks such as Warrior Met Coal, Inc. (NYSE:HCC). 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 13.06%, and its shares lost 27.37% of their value over the last 52 weeks. On July 11, 2025, Warrior Met Coal, Inc. (NYSE:HCC) stock closed at $52.97 per share with a market capitalization of $2.784 billion.
Black Bear Value Partners stated the following regarding Warrior Met Coal, Inc. (NYSE:HCC) in its second quarter 2025 investor letter:
“Warrior Met Coal, Inc. (NYSE:HCC) is a leading metallurgical coal producer (coal used to steel production). 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.
In Q1 2025, Warrior Met Coal saw revenue down 40% year-over-year due to compressing met coal prices. Despite a 10% production increase and tight cost control, negative free cash flow of $68 million reflects heavy investment in the Blue Creek mine. Liquidity remains robust at $617 million. Management maintained its full year guidance, emphasizing the strength of contracted sales, cost discipline, and continued advancement of the Blue Creek project amid market headwinds.
HCC’s existing mines should generate $100-$350MM in annual free cash flow (assuming lower for longer met coal prices). Blue Creek development is wrapping up by the beginning of 2026 and at mid-cycle should generate $100-$500MM in additional free cash flow. The combined assets should generate $200MM $850MM in free cashflow with non-heroic pricing and volume assumptions. This equates to ~$4-$16 in annual per share cash generation vs. a price of ~$46 or a 9-35% unlevered annual free-cashflow yield. 2026 should be a sea-change in their free-cash-flow generation.”
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, 32 hedge fund portfolios held Warrior Met Coal, Inc. (NYSE:HCC) at the end of the first quarter, which was 36 in the previous quarter. While we acknowledge the risk and potential of HCC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than HCC and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Warrior Met Coal, Inc. (NYSE:HCC) and shared Kingdom Capital Advisors’ views on the company in the previous quarter. in the previous quarter investor letter, Black Bear Value Fund highlighted Warrior Met Coal, Inc. (NYSE:HCC) as a compelling investment. In addition, please check out our hedge fund investor letters Q2 2025 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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