Why WHC is a great stock to own and why coal is a great business...

Why WHC is a great stock to own and why coal is a great business to be in!

For years Warren Buffet looked at Apple Corporation and thought the business was not good enough for him. Making and selling phones and computers was a business that he believed was too competitive to invest in. It was only in 2016 did he start buying Apple stock, In the words of Charlie Munger “we spend too long sucking our thumbs thinking about it” Apple is a company that has no debt, is buying back it’s shares, pays a great dividends and sell products people want to buy.

WHC is no Apple but has many great attributes, when it’s latest buyback is finished about 20% of shares could be brought back and cancelled, there is no debt, just about 2 Billion in cash in the bank earning perhaps 3.5% interest, that’s about 1.5 million a week! It’s operating in a business that is becoming harder and harder to start. The Vickery mine took 5 years to get all the approvals from the government and fighting court challenges from the greenies. God knows how many backsides they had to kiss to get this far with the mine. They are selling a product that despite all the propaganda is in high demand around the world and if there is either a hot European summer or a cold winter will be in even higher demand. With our dollar at 66 US cents WHC is in a great arbitrage trade for currency weakness, I can hardly wait for the Australian dollar to be 50 US cents. The dividends are fully franked and while 32 cents may have disappointed some holders I expect the final dividend will be much higher, 60 cents in my opinion. That’s just my opinion not financial advice! WHC while not glamorous, is a great stock to own long term. As a long term holder I can only see upside, if there is short term weakness I will be buying more. Watch the Australian dollar more than the coal price, there will be nothing but red ink in the next budget and if more interest rate rises are off the table there is only one direction for the Aussie dollar.

Good Luck to all Holders

Cheers Wang 44