Looks as if a number of hedge funds who did very well here are
looking to sell their stakes and move on. The special dividends
were paid not only with strong earnings but also with debt. Why
would they do that? I guess because they can. The ultimate end
game for HCC may be a buyout by a much larger player...which
may not happen until the $1 billion in tax loss carryforwards
are used up. So, the better the earnings the more quickly
tax losses get used up, the sooner either "new" investors will
move in or an acquirer will step up. HCC looks to be a very
well run company with a limit on how much Met coal can be
produced and they cannot impact the price their coal is sold at.
As I understand it, all of HCC's coal is exported mainly to South
America and Europe,with a bit going to India. The advantage HCC
has is that their coal is the highest quality and if/when the dollars
value falls they will look like a low cost provider.
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