What Makes Warrior Met Coal (HCC) an Attractive Stock?

Black Bear Value Fund, an investment advisor, released its fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. In December, the Black Bear Value Fund returned +0.2%, bringing 2025 returns to -12.6%. The S&P 500 returned +0.1% in December and +17.9% in 2025. In a rising market environment, the Fund has lost 10-15% over the two years. The Fund does not aim to replicate the Index, so some performance variation is expected. Heading into 2026, the firm has several strong names in its portfolio, even though the market is not receptive to them currently. The firm expects a significant rerating in these holdings as they are at the end of a capital-investment cycle. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, Black Bear Value Fund highlighted Warrior Met Coal, Inc. (NYSE:HCC). Warrior Met Coal, Inc. (NYSE:HCC) is a non-thermal metallurgical coal producer. On February 6, 2026, Warrior Met Coal, Inc. (NYSE:HCC) stock closed at $89.02 per share. One-month return of Warrior Met Coal, Inc. (NYSE:HCC) was -4.717%, and its shares are up 68.05% over the past twelve months. Warrior Met Coal, Inc. (NYSE:HCC) has a market capitalization of $4.717 billion.

Black Bear Value Fund stated the following regarding Warrior Met Coal, Inc. (NYSE:HCC) in its fourth quarter 2025 investor letter:

"Warrior Met Coal, Inc. (NYSE:HCC) is a leading metallurgical coal producer (coal used to steel production). There has been minimal worldwide met coal resource development over the last 10 years which could lead to tight supply (higher pricing) when steel production improves. We do not rely on a tight pricing market to do well with this investment. Currently the bulk of HCC’s FCF is being invested in a capital project that will be largely concluded in 2025 and is ahead of schedule. Once the business winds down their investment period they will gush cash.

HCC’s existing mines should generate $100-$350MM in annual free cash flow (assuming lower for longer met coal prices). Blue Creek development is wrapping up by the beginning of 2026 and at mid-cycle should generate $200-$500MM in additional free cash flow. The combined assets should generate $300MM $850MM in free cashflow with non-heroic pricing and volume assumptions. This equates to ~$6-$16 in annual per share cash generation vs. a price of ~$88 or a 7-18% unlevered annual free-cashflow yield. 2026 should be a sea-change in their free-cash-flow generation."

Warrior Met Coal, Inc. (NYSE:HCC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 32 hedge fund portfolios held Warrior Met Coal, Inc. (NYSE:HCC) at the end of the third quarter, up from 30 in the previous quarter. While we acknowledge the potential of Warrior Met Coal, Inc. (NYSE:HCC) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Warrior Met Coal, Inc. (NYSE:HCC) and shared Black Bear Value Fund's views on the company in Q3 2025. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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