Why One Fund Made Ramaco Resources a $182 Million Bet Amid a Staggering Stock Surge
Key Points
Connecticut-based Discovery Capital Management increased its position in Ramaco Resources by 4.18 million shares in the third quarter.
The overall position increased in value by about $164.67 million.
As of September 30, Discovery Capital held 5.53 million shares of Ramaco valued at $182.21 million, making it the fund's largest holding.
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On November 14, Connecticut-based Discovery Capital Management disclosed a significant buy in Ramaco Resources (NASDAQ:METC), increasing its stake by 4.18 million shares and seeing the overall position climb by about $164.67 million in value.
What Happened
According to an SEC filing dated November 14, Connecticut-based Discovery Capital Management added 4.18 million shares of Ramaco Resources during the third quarter. The fund’s stake rose to 5.53 million shares with a quarter-end market value of $182.21 million, reflecting a $164.67 million increase from the prior period.
What Else to Know
Ramaco Resources now accounts for about 10% of Discovery’s reportable U.S. equity AUM, making it the fund’s largest holding.
Top holdings after the filing:
- NASDAQ: METC: $182.21 million (10% of AUM)
- NASDAQ: IREN: $157.95 million (9% of AUM)
- NASDAQ: ORBS: $131.61 million (7% of AUM)
- NYSEMKT: GDLC: $101.19 million (6% of AUM)
- NYSE: AMX: $98.31 million (5% of AUM)
As of Thursday, METC shares were priced at $18.00, up 78% over the past year and well outperforming the S&P 500, which is up about 16% in the same period.
Company Overview
| Metric | Value |
|---|---|
| Price (as of Thursday) | $18.00 |
| Market Capitalization | $1.19 billion |
| Revenue (TTM) | $579.50 million |
| Dividend Yield | 2% |
Company Snapshot
- Ramaco Resources produces and sells metallurgical coal, with key assets including the Elk Creek, Berwind, Knox Creek, and RAM Mine properties.
- The company generates revenue through the extraction and sale of metallurgical coal to domestic and international steel producers and coke plants.
- It serves blast furnace steel mills and coke plants in the United States and international metallurgical coal consumers.
Ramaco Resources is a leading U.S. metallurgical coal producer with a diversified portfolio of mining assets across West Virginia, Virginia, and Pennsylvania. The company leverages significant controlled mineral reserves to supply high-quality coal to the steel industry, supporting both domestic and global demand. Its strategic focus on metallurgical coal positions it as a key supplier to steel mills and coke plants, providing a competitive edge through resource scale and market reach.
Foolish Take
For Discovery, Ramaco Resources to be its top holding signals a willingness to lean into cyclicality precisely when most investors are backing away from it. Operationally, the company is navigating a weak backdrop with discipline. Third-quarter revenue fell a steep 28% drop to $121 million year over year as pricing softened, yet cash costs declined to $97 per ton. Adjusted EBITDA came in at $8.4 million despite lower realized prices, while liquidity climbed to a record $272 million, including more than $77 million in net cash. That balance sheet strength matters when coal markets are volatile, and capital is scarce.
What differentiates Ramaco from a typical coal exposure is what sits alongside the core business. Management is actively transitioning toward a dual-platform model that includes rare earth and critical minerals development at the Brook Mine in Wyoming, a project backed by federal interest and early-stage infrastructure investment. It’s not a typical play, but it introduces optionality that pure-play coal peers lack.
Glossary
13F: A quarterly SEC filing required from institutional investment managers to disclose their U.S. equity holdings.
Assets Under Management (AUM): The total market value of assets a fund or investment manager oversees on behalf of clients.
Metallurgical coal: A type of coal used primarily in steel production, not for electricity generation.
Dividend yield: Annual dividend payments as a percentage of the stock's current price.
Trailing twelve months (TTM): The 12-month period ending with the most recent quarterly report.
Position change: The increase or decrease in the number or value of shares held in a particular investment.
Reportable assets: Investments that must be disclosed in regulatory filings, such as those required by the SEC.
Stake: The total number of shares or ownership percentage an investor holds in a company.
Quarter-end: The last day of a financial quarter, used as a reference point for reporting financial data.
Market reach: The extent of a company's ability to sell its products or services to customers in various markets.
Controlled mineral reserves: Mineral resources owned or managed by a company, available for future extraction and sale.
Blast furnace: An industrial facility where iron ore is converted into steel, often using metallurgical coal as a key input.
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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool recommends Liberty Broadband. The Motley Fool has a disclosure policy.
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