My presentation on Contura Energy. Yes, I know its coal, but did I tell you it was cheap?
Contura Energy (CNTE)
19 Wednesday Apr 2017
Posted in Uncategorized
No Called Strikes
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19 Wednesday Apr 2017
Posted in Uncategorized
My presentation on Contura Energy. Yes, I know its coal, but did I tell you it was cheap?
Any update in light of Q3 numbers? Seems like they are hitting the metrics that would indicate this continues to be undervalued. How does that impact your view that management sold off $17.4M?
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The stock is still cheap assuming coal prices don’t fall to 2015-16 prices, but I clearly backed the wrong horse in selecting a post-bankruptcy coal miner to buy.
Originally, I liked Contura precisely because it was diversified across thermal and metallurgical coal as it was met coal’s volatility that I feared the most. But it appears that an impending natural gas glut may make coal for power generation a worse place to be than in met coal. In hindsight, Warrior Met Coal (HCC) which IPO’ed after I invested in Contura, was the better performer because it isn’t diversified. It went public around $18 in Feb/March, and now sells for $20 after paying an $11 dividend last month. Warrior’s met coal is higher quality and its mines are better located for shipping than are Contura’s.
As for my current status, since my original thesis was based on the stock re-rating after raising its visibility and liquidity with an ipo,I felt it best to sell down after the IPO was cancelled, I now own only hold less than a 1% position for me on its way to zero. Between the botched IPO and delayed tender, I am not a believer in the management team and when I saw the shares trade below $56 last week, it occurred to me that maybe that’s why management sold at $56.40 in August.
If you have any insights into long-term met coal prices, I’d suggest looking at Warrior.
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