Cheers, thanks for the detailed response. There’s no shortage of risks.

The sharp drop in dividends and cash flow reflects the fall in Newcastle coal futures from around USD 415/t at the peak to about USD 115/t today. At these levels, we’re approaching the point where marginal producers begin to exit the market. However, New Hope, as a low-cost operator is likely profitable down to roughly USD 65/t and therefore remains well positioned. It’s hard to see coal prices falling much further from here. New hope is also about to double production. It’s a pretty unique set of circumstances. Not quite the no brainer it was a few years ago but certainly still stacks up well on a risk reward basis.

Fair enough @PhilO - I had always considered them to be the pick of the sector, just not a sector I want to invest in at this point myself. But it sounds like a good set-up for those who like that area of the market from what you've said.

True. It’s a highly unappealing sector. Mining in general. And coal in particular. I’ll be out as soon as the risk reward equation shifts. However current valuations of many of the companies I’d rather hold are well and truely in bubble territory.

Some are, and some just look like they are, and some are both - ProMedicus (PME) has looked to be in bubble territory for years - every time somebody breaks down how much growth is already factored into the share price at any given point in time, it just sounds so rediculous, like WHY on earth would you pay that much for a company that is priced for perfection and beyond perfection, and yet they just keep getting bigger and better and their share price just keeps going up - for a while there I wasn't really following them and every time I looked at them their SP had doubled.

But yeah @PhilO I know what you mean in terms of sectors like Banks, most Retail (consumer discretionary in particular but even consumer staples) look priced for growth, or have a premium built in, which would quickly come out if we had a few quarters of negative growth or actually had another recession, which has to happen sooner or later, probably sooner. Many larger companies look way too expensive to me, and quite a few mid sized ones also, and there's plenty of extra risk at the smaller end, so you can usually find some cheap microcap or nanocap companies, but they are usually cheap for a good reason.

Yeah, we've got to find value somewhere, and that will change from person to person depending on many things, including their personal interests and their risk tolerance. Sounds like you've done your homework, so hope it works out really well for you.

Spot on @Bear77

Our best retailers for example are well and truly priced for perfection, if not bubbly, in my view. JB and Nick Scali were trading on less than half their current multiples, just a couple of years ago. The businesses are executing well but honestly no better than they were then operationally. So, most of the gains of the last couple of years are based on other investors getting enthusiastic about the next few years looking as good as the last few...

As Howard Marks often says, we shouldn't predict but we can prepare. I don't own either anymore mostly on valuation grounds, but I am prepared to wade back in if sentiment changes and it isn't tough to see a few years ahead where US growth / debt / inflation / bond markets etc etc etc have the current enthusiasm waning and investors feeling negative on retail companies, like they were just a couple of years ago.

Time will tell. Retail is a cyclical business and history says we are close to the top of their cycle right now.

A bit of mental battle I had with myself in recent years was how far to stretch where I invested based on interest, knowledge and my intent of buying great or potentially great companies at OK prices. I like to be able to connect with the company either as a user or just by being immersed in what they’re doing. I don’t feel this at all with mining companies. I kind of look at them as a different category of investment all together. Maybe somewhere between cash and investing in non commodity companies. But there are times in the cycle where it just makes sense to be there based on a 20,000 foot back of the envelope analysis. I find the opportunity emerges as most people who look at commodities only consider the demand side of the equation. The supply side is often more consequential. That created the opportunity in coal over the last few years where it became hard setting up and getting funding for new mines or expansion.

19-Sep-2025: Two weeks ago I mentioned BlackRock here in this thread, and how I'd heard they were backing away in some respects from their anti-thermal-coal stance that Larry Fink (American billionaire businessman, Co-Founder, Chairman, and CEO of BlackRock) took a few years back which resulted in them banning companies that derived a high percentage of their revenue from thermal coal from being held in BlackRock's discretionary portfolios and funds (not all of their ETFs however) - I came across this youtube video this evening about BlackRock's move into Infrastructure ownership, including American power stations and even water assets. The community pushback is interesting: The BlackRock Situation Just Got Worse...

Their show notes:

BlackRock is trying to buy Minnesota Power, which provides power to over 150,000 people.

Why? They want to profit off of the soaring electricity demand from AI data centers.

If they win, and if it's profitable, your power company could be next.

--- end of excerpt ---

Source: https://www.youtube.com/watch?v=uwTxjZK17bs

BlackRock is the largest asset manager in the world; their assets under management (AUM) reached a record $12.5 trillion as of the second quarter of 2025. This significant figure highlights the company's continued growth, with an 18% increase over the preceding 12 months, driven by strong performance in its technology business and the acquisition of Global Infrastructure Partners (GIP).  No longer just an ETF provider, BlackRock is a major player in all sorts of areas - including infrastructure such as power generation assets - so Larry's stance on thermal coal does matter.

BlackRock is a publicly traded company with a current market capitalisation of US$176.09 billion, listed on the New York Stock Exchange under the ticker code BLK. Its shares are owned by a mix of institutional investors and individual shareholders, with major institutional owners including The Vanguard Group, State Street Corp, and Bank of America. Vanguard and State Street are the second and third largest providers of ETFs in the US, after BlackRock who is the largest provider, so it's little wonder that Vanguard and State Street are on BlackRock's share registry as major shareholders.

Many people will find this story boring / won't be interested, but I found it educational, so thought I'd share it, and this seemed as good a place as any to place the post.

Selling some of my New Hope holding, which is now probably too large a position in my portfolio anyway, to make space for buying more CSL. Did the same in my real money portfolio.