Investment Research report

Alpha Metallurgical Resources, Inc.

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Alpha Metallurgical Resources, Inc.
A High Alpha Short Opportunity
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Alpha Metallurgical Resources, Inc.
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Research Overview

INDEX:
S&P 500
Sector:
Energy
Position:
Short
Date:
May 17, 2022

After conducting a forensic financial and accounting review, Spruce Point believes Alpha Metallurgical Resources, Inc. (NYSE: AMR), formed from the assets of Alpha Natural Resources (ANR), a coal industry roll-up that filed for bankruptcy in 2015, is masking significant financial stress in its core mining operations and has used aggressive tax refunds to drive cash flow. Based on our investigation, we estimate 40% to 60% downside risk, or $60.58 - $90.87 per share.

The report highlights several key concerns with the company, including:

  • We find questionable business activities and reporting between closely associated companies
  • Evidence of inflated reserves and concerns of independence on the reserve report
  • Evidence of overstated cash, significant cash shortfalls, and substantial “hidden” off-balance sheet debts
  • Evidence of critical operating expense avoidance through Dominion Terminal – an “Affiliate”
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