WHC has already bounced over 13% from last week’s “washout” style low and we’ve been asked more than once where can we plan to take profit – MM went long earlier this week following the coal producers’ aggressive 30% pullback. The underlying picture for coal may have dulled over recent weeks but we feel the 30% correction was hugely overplayed. The company’s 240mn share buyback began last month and with the ongoing tailwind from strong coal prices, we could easily see the “cash cow” cycle continue into FY23 and FY24, in other words meaning that the stock is likely to find support into weakness.
Interestingly, Ray Zage who is a Director of WHC bought $1.2m worth of stock last week. It’s interesting because 1. Ray owns ~11m shares which is a big holding & 2. He is a buyer of weakness when he thinks it’s cheap with a track record of stepping up at opportune times.
- We are open-minded at this stage as to whether WHC can retest $11 in 2022; worst case, we believe that $8 will offer excellent support over the coming months, i.e. stay long and see what happens.
MM is bullish and long WHC
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