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Nordstern Capital: “We Expect Higher Sales Volumes, Sales Prices, and Record Income for ARCH”

·2 min read

Nordstern Capital, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. In its 2022 second-quarter letter, the fund highlighted that they continue to believe they're well positioned for the storm or for the eventual sunshine as well, given the market exuberance, recession risk, rising interest rates, and inflation, all of which seem to be materializing. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.

In its Q2 2022 investor letter, Nordstern Capital mentioned Arch Resources, Inc. (NYSE:ARCH) and explained its insights for the company. Founded in 1969, Arch Resources, Inc. (NYSE:ARCH) is a St. Louis, Missouri-based coal mining company with a $1.9 billion market capitalization. Arch Resources, Inc. (NYSE:ARCH) delivered a 40.81% return since the beginning of the year, while its 12-month returns are up by 87.86%. The stock closed at $128.59 per share on July 28, 2022.

Here is what Nordstern Capital has to say about Arch Resources, Inc. (NYSE:ARCH) in its Q2 2022 investor letter:

"'It's atypical for a company with our cash-generating capabilities to have such modest cash requirements' - Paul Lang, CEO Arch Resources Inc

This statement sounds like it came from a mature capital-light software giant. However, those are the words of the CEO of an American coal mine operator trading at 2-times free cashflow with a 25% forward dividend yield and a massive share buyback program. Not everything is rosy in coal investor land. ARCH struggles with persistent rail and shipping issues. In the first quarter ARCH only sold about 16% of the met coal tonnage that management expects to sell throughout 2022. The company received only 60% of the required train capacity. Management cited inadequate rail service as the single biggest challenge. However, ARCH delivered record quarterly net income regardless..." (Click here to see the full text)

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Our calculations show that Arch Resources, Inc. (NYSE:ARCH) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Arch Resources, Inc. (NYSE:ARCH) was in 45 hedge fund portfolios at the end of the second quarter of 2022, compared to 40 funds in the previous quarter. Arch Resources, Inc. (NYSE:ARCH) delivered a -23.93% return in the past 3 months.

In May 2022, we also shared another hedge fund’s views on Arch Resources, Inc. (NYSE:ARCH) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

Disclosure: None. This article is originally published at Insider Monkey.