David Hay — Friday POW!: A (Black) Diamond In The Rough
The full coal case promised in Monday's Portfolio Update: coal — "humanity's first high-density energy source," once called black diamond and supposed to be extinct by now — has instead seen global usage rise ~65% this century. Haymaker advocates dollar-cost-averaging into two Australian producers: Yancoal (YACAF), "a dud" until this week's ~10% pop to ~$4.25 and still ultra-depressed, and New Hope (NHPEF / NHC), which "hung in there admirably well" (a three-year high last month, now ~12% off). The trigger is the Middle East: escalating hostilities threaten LNG shipments to Asia, and thermal coal — which competes head-on with LNG for electricity generation in China, India and Japan (the first two ≈ 3 billion people) — sits near its cheapest level ever relative to LNG. Plus a retrospective on the coal winners: Warrior Met (HCC, +51%) and Peabody (BTU), which tripled from ~$13 before falling hard to ~$22.
One-line take: This week's POW! is the full write-up behind Monday's coal add — an explicit buy / re-buy and dollar-cost-average into Yancoal (YACAF) and New Hope (NHPEF, carried here as NHC), both rated Positive. The setup: coal was "supposed to be going the way of the dodo bird," yet global coal usage is up ~65% in the 21st century and has risen even over the past decade. Haymaker has historically avoided the group on pollution grounds — steering toward met coal (steel) over thermal (electricity) — which is how Warrior Met (HCC) became "a most profitable example" from a Jan-2025 Trader Ferg call (+~51% despite a 20% correction), and why the March-24-2025 Peabody (BTU) tout near $13 was "heavily qualified" — it tripled, then "come down very hard, to the $22 vicinity" (partial gain-harvesting had been suggested just under $24). Of the two Aussies re-recommended Monday, YACAF "has been a dud" (unsurprising given HCC's and especially BTU's weakness) while NHPEF "hung in there admirably well," hitting a three-year high last month before easing ~12%. Haymaker rushed the buy-up out "ASAP" on the latest Middle East developments, which "pose an escalating threat to LNG shipments to Asia" — and LNG competes directly with coal in power generation across China, India and Japan. The week was "half right": YACAF popped ~10% (to ~$4.25), NHPEF flat — sensible, since YACAF had been slammed far harder. Ferg preferred NHPEF earlier this year and readers "might lean toward NHPEF," but at Yancoal's ultra-depressed price it "deserves to be bought or… re-bought" — "we like both of them… a lot." On valuation YACAF is clearly cheaper than NHPEF ("often the way they roll"), and both look cheaper than the five-year charts suggest because the 2022 post-Ukraine revenue spike distorts the look-back. The macro spine: the "Memo of (Mis)Understanding" peace consensus — which Haymaker "took strong exception to" — briefly let trapped LNG carriers leave the Persian Gulf, but per tankermap.com "all product shipments have once again fallen off a cliff." Per Ferg, thermal coal is about as cheap as it has ever been relative to LNG, and with LNG prices "once again ripping" plus unusually hot weather in Europe and China (and the annual Indian heat, with India now a much bigger importer) that should pull thermal coal prices up — aggravated by Indonesia, the world's largest thermal-coal exporter, materially cutting exports. Emergency reserves are drawn down and "countries in Europe and Asia are likely to soon be in desperate need of adequate coal supplies"; when it's environment vs. "keeping the lights on, not to mention the air-conditioning, there's not much of a contest." Haymaker openly prizes the loneliness of the trade — "similar to our extremely against-the-grain aggressive buy on oil at the end of June."
1. Stocks & names mentioned
| Ticker | Name | Research | View | What he said | At |
|---|
| YACAF | Yancoal Australia (ADR) | QT · SA · STK | Positive | The week's featured buy-up (with NHPEF). Since the original write-up it "has been a dud" — "not surprising considering the group's recent weakness as reflected by HCC and, especially, BTU." This week it popped about 10% and is "now up to $4.25." Haymaker's call: "at Yancoal's ultra-depressed current price we believed it deserves to be bought or, if you did so on our original write-up, re-bought" — "we like both of them… a lot." On the valuation charts YACAF "is obviously trading much cheaper than NHPEF" ("often the way they roll"), and both look cheaper than the five-year P/S and P/E charts imply once the 2022 post-Ukraine revenue spike-and-retreat is stripped out. Driver: escalating Middle East threat to LNG shipments to Asia, with thermal coal "about as inexpensive as it has ever been relative to LNG" and LNG "once again ripping." Advocates dollar-cost-averaging in. A Haymaker Buy-list holding. | read ↗ |
| NHC | New Hope Corp (Australian coal; ADR NHPEF) | QT · SA · STK | Positive | The stronger half of the coal pair — "it has hung in there admirably well," hitting a three-year high as recently as last month before easing about 12% (the five-year chart carries a visible three-year resistance line). Flat on the week while YACAF popped 10%, which "makes some sense because YACAF was slammed much harder in recent months." Trader Ferg "shrewdly preferred NHPEF earlier this year," and Haymaker allows that "perhaps you might lean toward NHPEF" — but "we like both of them… a lot." Trades at a clear valuation premium to YACAF; also cheaper than the five-year look-back suggests once the 2022 revenue spike is adjusted for. Same thesis: LNG-to-Asia disruption pulls thermal coal up, with Indonesia cutting exports and Europe/China/India heat compounding it. Dollar-cost-average in. A Haymaker Buy-list holding. | read ↗ |
| BTU | Peabody Energy | QT · SA · STK · FA | Neutral | A "heavily qualified tout" from March 24th, 2025 near $13 — equivocal because BTU "primarily produces thermal coal which is more environmentally unfriendly." It "went on to triple from there," but "since March it has come down very hard, to the $22 vicinity." "That's still a nice gain and we had suggested partial gain-harvesting when it was just under $24." Cited as the sharpest example of the group's recent weakness (the reason YACAF's slide "is not surprising"). A past winner with profits already partially taken — no fresh buy call this week. | read ↗ |
| HCC | Warrior Met Coal | QT · SA · STK · FA | Neutral | The met-coal (steelmaking, not power generation) name Haymaker followed Trader Ferg into back in January 2025 — "a most profitable example" of the variety they're willing to own, since it sidesteps the thermal-coal pollution objection. It "subsequently soared by ~51%, despite having corrected by 20%." Named this week as evidence of the coal group's recent weakness (with BTU) rather than as a fresh recommendation. A carried winner; no new call. | read ↗ |
"View" is Haymaker's stance in this post. YACAF and NHC (New Hope, quoted in the post by its ADR symbol NHPEF) are the two names actively recommended — buy / re-buy and dollar-cost-average. BTU and HCC are retrospective winners cited to frame the group's weakness (BTU's gains partially harvested under $24), not fresh buys. Referenced only (not tickers): Trader Ferg (the energy-research source behind the HCC and NHPEF calls), tankermap.com (the shipping visual), Indonesia (the world's largest thermal-coal exporter, cutting exports) and the "Memo of (Mis)Understanding" Mideast peace framework. Research: QT Qualtrim · SA Seeking Alpha · STK Stock Analysis. (NHC's QT/SA links use the ADR symbol NHPEF.)
2. Talking points
The dodo that didn't die — coal usage up ~65% this century
- The last few months "have been extremely rough for humanity's first high-density energy source that was once known as 'black diamond'" — coal, which "was supposed to be going the way of the dodo bird by now."
- Instead global coal usage has increased by approximately 65% in the 21st century, and worldwide consumption has risen even over the past decade, "albeit at a slow clip." "This was not supposed to happen."
Why Haymaker avoided the group — and the met-coal exception (HCC)
- "We've been wary of positively highlighting coal stocks because of the exceedingly polluting nature of what they produce," and "particularly steered clear of the thermal variety — coal used to generate electricity — versus 'met coal' which is employed in steel production."
- Warrior Met Coal (HCC) was "a most profitable example of the latter" for subscribers who followed the January 2025 lead: it "soared by ~51%, despite having corrected by 20%." The idea came from "our great source of intelligence on energy opportunities, the oft-mentioned Trader Ferg."
The qualified Peabody tout — a triple, then a hard give-back
- BTU got "a heavily qualified tout" on March 24th, 2025 near $13 — equivocal precisely because it "primarily produces thermal coal which is more environmentally unfriendly."
- It "went on to triple from there. However, since March it has come down very hard, to the $22 vicinity. That's still a nice gain and we had suggested partial gain-harvesting when it was just under $24."
Monday's re-recommendation — one dud, one holdout
- Monday's Portfolio Update re-recommended two previously-highlighted Australian producers. Yancoal (YACAF) "has been a dud" — unsurprising "considering the group's recent weakness as reflected by HCC and, especially, BTU."
- New Hope (NHPEF) by contrast "has hung in there admirably well" — it hit a three-year high as recently as last month, though "even NHPEF has eased about 12% lately." (Bloomberg was down at publication, so the post flags YACAF is now up to $4.25.)
Why now — the Middle East threatens LNG to Asia
- The buy-up went out "ASAP based on the latest development in the Middle East. Those pose an escalating threat to liquefied natural gas (LNG) shipments to Asia."
- The substitution link is the whole trade: "LNG competes directly with coal in terms of electricity production, in many countries including China, India, and Japan. Note that the first two have a combined population of roughly three billion!"
Half right on the week — and which one to lean toward
- "We felt this week might see a rally in these two Aussie coal producers and we were half right: YACAF has popped about 10%, but NHPEF is flat" — sensible, "because YACAF was slammed much harder in recent months than NHPEF."
- "Ferg shrewdly preferred NHPEF earlier this year. Yet, at Yancoal's ultra-depressed current price we believed it deserves to be bought or… re-bought. At this point, perhaps you might lean toward NHPEF but we like both of them… a lot."
Valuation — and the 2022 distortion in the five-year charts
- On the Price/Sales and P/E charts, "YACAF is obviously trading much cheaper than NHPEF. As you can see, that's often the way they roll."
- Important adjustment: "both would look considerably more inexpensive on a trailing five-year basis had revenues not spiked in 2022 and then rapidly retreated back down after the 2022 Russian attack on Ukraine" — so on a normalized view "both would appear cheaper than they do on a five-year look-back basis."
Why coal crashed — and why it rallied earlier this year
- "Coal prices did a swan dive since they went vertical in 2022," when Europe faced "an existential natural gas and LNG shortage." "Because natural gas/LNG and thermal coal trade in concert, it was totally logical for coal prices to rocket."
- Both YACAF and NHPEF "had strong rallies earlier this year due to the outbreak of the war against Iran" — "similar to what happened with energy shares. The recent swoon was also connected."
The Memo of (Mis)Understanding — shipments "off a cliff" again
- The cause of the swoon was "the widespread belief, which Haymaker readers know we took strong exception to," that there would be "a lasting peace in the Middle East as a result of the Memo of (Mis)Understanding," with the Strait of Hormuz "open for business."
- Briefly true — "LNG carriers, long trapped in the Persian Gulf, began to move out," feeding "unfounded hope" that the Asian/European LNG shortage would abate. "Instead, per the following visual [tankermap.com], all product shipments have once again fallen off a cliff."
The relative-price signal — coal is historically cheap vs LNG
- Per Ferg, "thermal coal is about as inexpensive as it has ever been relative to LNG. With LNG prices once again ripping, that is likely to pull up thermal coal prices" — particularly with "unusually hot weather hitting both Europe and China." (Caveat noted: LNG prices were much higher in 2022 "…so far.")
- Demand and supply both tighten: "it is always scorching in India this time of year and it has become a significantly bigger coal importer," while Indonesia — "the world's largest exporter of thermal coal" — "is materially reducing its coal exports."
The moral objection, answered — and the lonely trade
- "We readily concede that many investors have a hard time buying coal stocks. If those are on your do-not-buy list, we totally understand." But the energy shortage "has become… dire… for a massive slice of the world's population" and is "worse than it was a few months ago due to how much emergency reserves have been drawn down." "When it comes to environmental considerations vs keeping the lights on, not to mention the air-conditioning, there's not much of a contest."
- The conclusion: "we advocate dollar-cost-averaging into these two leading coal producers. We particularly love what a lonely stance this is… similar to our extremely against-the-grain aggressive buy on oil at the end of June."
3. In plain English
A jargon-free note on why each name is cited. (Companion to the table above; renders on each name's consolidated page.)
YACAF — Yancoal Australia Positive
Yancoal digs up coal in Australia and ships most of it to Asia. The kind it mostly sells is "thermal" coal — the sort burned in power stations to make electricity — which matters because the direct competitor for that job is liquefied natural gas (LNG). When LNG is scarce or expensive, power plants in China, India and Japan burn more coal instead, and coal prices follow LNG up. That substitution is the entire bet here.
The stock has been a disappointment since Haymaker first wrote it up — it fell hard when investors decided the Middle East had calmed down and LNG tankers would flow freely again. Hay never believed that, and the shipping data now backs him: cargo movements out of the Persian Gulf "have once again fallen off a cliff." Meanwhile coal is about as cheap as it has ever been compared with LNG, Europe and China are having a hot summer, India is importing more coal every year, and Indonesia — the world's biggest coal exporter — is deliberately shipping less. Yancoal bounced roughly 10% this week to about $4.25, and Hay thinks that's the beginning, not the end: buy it if you don't own it, buy it again if you bought higher, and add gradually rather than all at once (that's what "dollar-cost-averaging" means — spreading purchases over time so a further dip helps you instead of hurting you). He notes it's the cheaper of his two coal names on the standard value yardsticks, and cheaper still once you ignore the freak 2022 revenue spike that makes the five-year charts look misleading. He also likes that almost nobody else wants to own coal — the same lonely position he took on oil in late June, which then worked.
NHC — New Hope Corp (ADR NHPEF) Positive
New Hope is the other Australian coal miner Hay wants owned — the higher-quality, better-behaved half of the pair. US investors typically buy it through the over-the-counter listing NHPEF, which is why the post calls it that. Unlike Yancoal, it has held up well: it touched a three-year high just last month and has only slipped about 12% since, and it didn't move at all in this week's coal bounce because it never got knocked down the way Yancoal did.
The reason to own it is the same one: as Middle East trouble threatens LNG shipments to Asia, electricity producers substitute coal, and coal prices get pulled up with gas. Trader Ferg — the outside energy researcher whose calls Hay follows — preferred New Hope earlier this year, and Hay concedes a cautious investor "might lean toward NHPEF." It is the more expensive of the two on price-to-sales and price-to-earnings, which is normal for this pair. But the verdict is not either/or: "we like both of them… a lot." Buy gradually, over time, and expect the payoff to come from a shortage that Europe and Asia are walking into with depleted emergency reserves.
BTU — Peabody Energy Neutral
Peabody is the big American thermal-coal producer. Hay recommended it in March 2025 at around $13 but with obvious reluctance — thermal coal is the dirtiest end of the business, so the endorsement was, in his words, "heavily qualified." The stock then tripled. He suggested taking some profits just under $24, which turned out to be good timing: it has since fallen hard, to about $22.
He isn't recommending it again this week. It appears here as context — proof that the whole coal group has been beaten up lately, which is why his Australian pick Yancoal falling was "not surprising." The practical lesson embedded in the story is his standard discipline: when a speculative, ethically-uncomfortable position triples, harvest part of the gain rather than riding the entire position through the round trip.
HCC — Warrior Met Coal Neutral
Warrior Met mines "met" coal — metallurgical coal, used to make steel, not to generate electricity. That distinction is why Hay was willing to own it in the first place: it avoids the power-plant-emissions objection that keeps him away from thermal coal. He followed Trader Ferg into it in January 2025, and it rose about 51% even after giving back 20% from its peak.
It's mentioned this week as a marker of how the coal sector has traded recently, not as a new buy. Treat it as a scorecard entry — evidence that Ferg's coal research has paid, which is part of why Hay is willing to back Ferg's Australian names now.
Summary derived from the paid Haymaker newsletter (text in transcript.txt) for personal study. Not investment advice. © Haymaker / David Hay for source material.