Australian coal producers tumbled yesterday after Whitehaven’s (WHC) CEO Paul Flynn sold 900,000 shares and peer New Hope (NHC) delivered a trading update citing disruptive weather hindering coal supply, no good news there, the combination led to NHC -8.8% and WHC -6.7% being the main boards worst performing 2 stocks.
- Insider selling is never a good sign and very often a bad one, it would appear Mr. Flynn believes after WHC has rallied over 200% in 2022 the “easy money” is now in the rear-view mirror.
We believe domestic coal stocks still represent good value into periods of weakness as they continue to “pump out the cash” and buyback their own shares, however, after marching higher through 2022 meaningful moves back above $10 by WHC are likely to require the tailwind of firming coal prices or just some time for earnings flow back to the company i.e. the stocks are being priced for the “high coal price party” to end which makes sense for a cyclical commodity.
When we look at the correlation between Whitehaven (WHC) and Northern Star (NST), a prominent Australian gold producer, the picture has become far more mixed and MM is positioned accordingly e.g. the Flagship Growth Portfolio is holding 5% in Newcrest Mining (NCM) and 3% in Whitehaven Coal (WHC).
MM is long and bullish WHC and NCM into Christmas
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Whitehaven Coal (WHC) v Northern Star Resources (NST) i.e. another case
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Whitehaven Coal (WHC) v Northern Star Resources (NST) i.e. another case
