The coal price has rallied exponentially higher over the last 18-months yet Whitehaven Coal (WHC) is less than 50% of its price 3-years ago, the miner may have dropped the ball operationally a few times but the disconnect has stretched too far in our opinion, the tricky question is by how much.
- On pure fundamentals WHC should arguably be trading well in excess of $5.
- However fossil fuels are vey on the nose at present with many fund managers regarding them as “persona non grata” in their portfolios hence by definition drastically reducing the demand side of the equation i.e. things can be cheap for years.
We are remaining long WHC for now but investors should anticipate elevated volatility the higher the stock rallies.
MM remains bullish and long WHC
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