Hi Peter,
We were inundated with questions around Whitehaven Coal (WHC) on Wednesday which is no surprise with the stock falling around -6%, albeit on a very weak day for local stocks. However, this poor day was compounded what’s been an tougher 6 months for the coal miner with it having dropped -49% from last Octobers high, above $11.
MM caught this particular falling knife closer to $8 which looked good at the time with the stock ~25% below its 2022 high but as has been the trend of late the weak keep getting weaker and WHC has now dropped to around $6 placing our existing position under pressure – we’re glad its only a 4% exposure.
The reason we bought WHC was our view that fossil fuels will be in demand longer than many hope/believe over the coming years but with the commodity now down around 70% from last years high we have been too optimistic short-term. However on balance we do believe the sector will recover through 2023/4:
- MM is staying long WHC but at this stage we have no interest in increasing our position.