Target $9.36, page-758

Interesting comments from fund manager Nicolas Bryon in the AFR:

Are markets underestimating the opportunity in coal? Which coal stocks do you like?

I liken the financial outcomes that are about to be reported by coal companies as “Bigger than Ben-Hur”! The market remains slow to appreciate the true dynamics about to unfold.

As we saw with the rally in iron ore over the past couple of years post-COVID-19, the extreme cashflow generation led to dramatically increased dividends and buyback potential of more than 10 per cent of equity.

In the case of thermal coal companies over the coming year, this increases by at least a factor of two. I have never seen anything like this in my entire career which spans 25 years. The numbers that will be printed over the next couple of quarters are so large that some companies will be able to buy back their entire issued capital and then some.

As to preferred plays, at the big end of town, we own Whitehaven and in small caps, we own Terracom.

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