Warrior Met Coal (HCC) is Anticipating Cash Flow After the Investment Period Closes

Black Bear Value Partners, an investment management firm, published its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Black Bear Value Fund returned -7.1% in September and -1.0% in the quarter, and -12.7% YTD. The S&P 500 returned +3.6% September, +8.1% in the quarter, and +14.8% year-to-date. HFRI Value Index returned +1.3% in September, +5.9% in the quarter, and +13.7% year-to-date. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Black Bear Value Fund 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 10.58%, and its shares gained 6.64% of their value over the last 52 weeks. On October 8, 2025, Warrior Met Coal, Inc. (NYSE:HCC) stock closed at $64.89 per share, with a market capitalization of $3.411 billion.

Black Bear Value Fund stated the following regarding Warrior Met Coal, Inc. (NYSE:HCC) in its third 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 Q2 2025, Warrior Met Coal saw revenue down 30% year-over-year due to compressing met coal prices. Despite a 6% production increase and tight cost control, negative free cash flow of $57 million reflects heavy investment in the Blue Creek mine. Liquidity remains robust at $545 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 ~$64 or a 6-25% unlevered annual free-cashflow yield. 2026 should be a sea-change in their free-cash-flow generation.”

In another article, we covered Warrior Met Coal, Inc. (NYSE:HCC) and shared the list of best coal stocks to buy according to hedge funds. In its Q2 2025 investor letter, Black Bear Value Fund discussed Warrior Met Coal, Inc.’s (NYSE:HCC) investments in Blue Creek mine. In addition, please check out our hedge fund investor letters Q3 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.