Energy Materials model basket

Coal

A thin, deliberately concentrated book across metallurgical, thermal, royalty, and coke-adjacent names.

What is the thesis for Coal?

A seven-holding portfolio of coal and coal-adjacent operators assembled after most of the cohort failed the standard one-year absolute-return screen. The concentration is the thesis.

This is a curated QuantLink model basket. It is not a filed portfolio, not a fund, and not investment advice.

Published Apr 14, 2026. Updated Apr 14, 2026. Source: QuantLink curated model basket and FastAPI ideas endpoint.

Holdings
7
Benchmark
SPY
Status
New
1Y model return
-28.8%

Performance as of Oct 11, 2026.

Thesis narrative

The question

After a year in which the coal cohort materially underperformed the S&P 500 and most listed names failed a standard absolute-return hurdle, is there a defensible thesis for holding the seven that cleared the relaxed screen -- and does the concentration itself carry information about where the cohort's cash-flow durability actually lives?

Base rates

The reference class is commodity cohorts whose secular-decline narrative diverges from their near-term cash-flow reality: US tobacco manufacturers through the 1998-2005 window, US onshore conventional oil through 2009-2012, and integrated steel through 2015-2018. In each case, the cohort's total-return profile was driven by two features the market under-weighted: very high free-cash-flow yields at depressed multiples, and a bifurcation in end-market exposure that the headline framing missed. The base rate for holding the survivors through the tail of a secular-decline narrative is roughly the 55th-70th percentile of resource-sector sleeves over a three-year horizon, with the overwhelming majority of the return coming from cash distribution rather than multiple expansion.

The coal cohort trailed SPY's roughly 28-29% one-year return by a wide margin through the period ending March 2026. The screen had to drop the absolute-return hurdle to populate a book at all. That is the thesis, not an embarrassment -- the imputed-expectations gap is widest precisely when a cohort has just underperformed sharply and the survivors are the names whose underlying cash flows did not break.

A second base rate worth naming: metallurgical coal prices have historically tracked integrated steel spreads with a six-to-nine-month lag, while thermal coal prices track natural-gas basis and grid-reliability spreads. The two commodities are frequently conflated in the headline cohort and are now on visibly different cycles.

Why consensus is wrong

The sell-side frames coal as a single secular-decline cohort. That framing was accurate through roughly 2019, when thermal demand was falling and metallurgical demand was cyclical around a flat trend. Two things have changed since. First, thermal coal's marginal-demand story in the US has inverted: grid operators facing AI data-center load growth, coincident retirements of aging gas peakers, and transmission-queue backlogs are extending coal-plant operating lives rather than accelerating retirements. PJM, MISO, and ERCOT have each announced extensions on specific units through 2032 or beyond. Second, metallurgical coal has decoupled from the thermal decline narrative on steel-cycle fundamentals that are independent of the grid mix.

The second piece the consensus misses is capital return. The cohort's survivors run 40-60% free-cash-flow yields at current prices with balance sheets largely rebuilt from the 2015-2020 cycle. Payout ratios on variable-distribution frameworks have run at 60%+ of free cash flow. At these yields, the cash return alone clears a reasonable equity hurdle over three years regardless of multiple path.

Third, royalty and coke-adjacent exposures inside the cohort carry different cash-flow profiles than the operating mines themselves, and the market prices them together.

Position construction

This is a deliberately concentrated seven-name book. The concentration mirrors the water-infrastructure precedent where only three names cleared the hurdle and we held only those three. Here the cohort yielded seven, and we hold seven. HCC was excluded because it sits inside a separate steel-adjacent idea. The book is thin because the cohort is thin, and diluting with screen-fails would import the cash-flow deterioration the screen was designed to filter out.

The seven names cluster into three groups.

Diversified thermal anchors (~40%). BTU at 20% is the global seaborne and US domestic thermal franchise with exposure across PRB, Illinois Basin, and Australian assets. ARLP at 20% is the Illinois Basin thermal producer with the most consistent distribution history in the cohort -- the master limited partnership structure and coverage profile make it the closest analogue to a yield anchor.

Metallurgical coal (~36%). METC (20%) is the Central Appalachian metallurgical producer with the cleanest inventory and lowest all-in sustaining cost in the book. AMR (~16.4%) is the largest metallurgical name by reserve base, with export-terminal flexibility that lets the cash flow ride the global steel cycle rather than US domestic demand. Together these two positions carry the steel-cycle exposure that is structurally decoupled from the thermal narrative.

Royalty and adjacency (~23.6%). NRP (~11.1%) is the mineral-rights royalty trust -- non-operating cash flow from coal and soda ash with essentially no reinvestment requirement. HNRG (~6.9%) is the Illinois Basin thermal producer with an integrated power-generation asset that captures the grid-firming thesis directly. SXC (~5.6%) is the domestic coke producer with contracted supply to US integrated steel mills; the revenue model is fee-based take-or-pay, not commodity-priced.

Asymmetric payoff

If thermal coal retirement curves stay deferred on the announced schedule, metallurgical spreads hold near current levels, and the cohort continues returning 40-60% of free cash flow annually, the book returns roughly 14-22% annualized over three years, with the majority coming from cash distributions. If steel demand contracts and grid firming pivots faster toward batteries and gas peakers, the book returns roughly -15 to -25%. If a Chinese or Indian steel re-acceleration tightens seaborne metallurgical markets, or if AI data-center siting forces additional US thermal extensions, the right tail is 30-45%.

At a 50% base, 30% bear, and 20% bull weighting, expected value is roughly +8 to +14% annualized against an SPY base rate near +8%. The expected-value edge is narrower than in other energy books because the downside scenarios are more severe; the payoff is genuinely asymmetric, not symmetrically skewed.

Three things that would change our mind

  1. Two or more announced coal-plant retirement extensions being reversed by state-level regulatory or political action, removing the grid-firming leg of the thermal thesis.
  2. Seaborne metallurgical coal benchmarks falling below $150 per tonne for two consecutive quarters while global steel production declines -- signalling that the met-thermal decoupling is collapsing back into a single cycle.
  3. A cohort-wide move by the surviving operators to rebuild growth capex and suspend variable distributions, which would invalidate the cash-return thesis that currently underwrites the book's expected return.

What we're explicitly NOT betting on

We are not betting on a thermal coal renaissance or a reversal of long-run secular decline. The thesis requires only that retirements slip by five-to-eight years against the market's expectation -- a much weaker claim. We are not holding HCC; it sits in a separate steel-adjacent idea. We are not holding the Chinese or Indonesian listed thermal operators; they failed the screen on different grounds than the US cohort. And we are not padding the book with names that failed the one-year absolute-return hurdle to look more diversified -- the seven-holding concentration, like the three-holding water-infrastructure precedent, is deliberate. Diluting it would reduce expected return without reducing the risk that actually matters, which is that any one of the three sub-cohorts -- thermal, metallurgical, or royalty -- is misread.

Model basket holdings

Model basket: curated equal or target weighting, not a filed portfolio. Weights are the target basket weights returned by the live ideas endpoint.

NameSymbolModel weight
Peabody Energy CorporationBTU20.00%
Ramaco Resources, Inc.METC20.00%
Alpha Metallurgical Resources, Inc.AMR16.36%
Alliance Resource Partners, L.P.ARLP20.00%
Natural Resource Partners L.P.NRP11.14%
Hallador Energy CompanyHNRG6.94%
SunCoke Energy, Inc.SXC5.56%

Backtested performance vs SPY

Performance is backtested from the returned tearsheet series. It reflects the model basket methodology and benchmark series, not live fund returns or a filed portfolio track record. Performance as of Oct 11, 2026.

Total Return

-28.8%

↓ SPY +17.4%

Ann. Return

-29.2%

↓ SPY +17.7%

Ann. Vol

38.0%

↑ SPY 12.7%

Sharpe

-0.77

↓ SPY 1.39

Max Drawdown

-36.2%

↓ SPY -9.1%

Alpha vs SPY

-36.1%

↓ hit rate 46.8%

Performance as of Oct 11, 2026.

Rolling Performance vs Benchmark

Portfolio Holdings

Holding
Weight
Country
Exchange
Sector
Industry
Mkt Cap
Price
1Y
1Y Trend
ARLP
ARLPAlliance Resource Partners, L.P.
20.0%
—
—
—
—
—
—
—
BTU
BTUPeabody Energy Corporation
20.0%
—
—
—
—
—
—
—
METC
METCRamaco Resources, Inc.
20.0%
—
—
—
—
—
—
—
AMR
AMRAlpha Metallurgical Resources, Inc.
16.4%
—
—
—
—
—
—
—
NRP
NRPNatural Resource Partners L.P.
11.1%
—
—
—
—
—
—
—
HNRG
HNRGHallador Energy Company
6.9%
—
—
—
—
—
—
—
SXC
SXCSunCoke Energy, Inc.
5.6%
—
—
—
—
—
—
—

SSR performance series fallback

The table below is the server-rendered reference series behind the interactive chart. Values show the wealth index level from a 1.00 starting value, not a second 1Y return figure. Series as of Oct 11, 2026.

DateModel basket wealth indexSPY
Oct 14, 20251.0000x1.0000x
Oct 15, 20250.9434x1.0044x
Oct 16, 20250.9472x0.9976x
Oct 17, 20250.9123x1.0033x
Oct 20, 20250.9384x1.0137x
Oct 21, 20250.8853x1.0137x
Oct 22, 20250.8715x1.0084x
Oct 23, 20250.8594x1.0144x
Oct 24, 20250.8578x1.0227x
Oct 27, 20250.8560x1.0347x
Oct 28, 20250.8251x1.0375x
Oct 29, 20250.8232x1.0380x
Oct 30, 20250.8176x1.0266x
Oct 31, 20250.8485x1.0299x
Nov 3, 20250.8637x1.0319x
Nov 4, 20250.8277x1.0196x
Nov 5, 20250.8184x1.0232x
Nov 6, 20250.8146x1.0122x
Nov 7, 20250.8192x1.0132x
Nov 10, 20250.8163x1.0290x
Nov 11, 20250.8192x1.0314x
Nov 12, 20250.8313x1.0319x
Nov 13, 20250.7924x1.0148x
Nov 14, 20250.7864x1.0146x
Nov 17, 20250.7716x1.0052x
Nov 18, 20250.7675x0.9968x
Nov 19, 20250.7398x1.0006x
Nov 20, 20250.7180x0.9854x
Nov 21, 20250.7152x0.9952x
Nov 24, 20250.7165x1.0098x
Nov 25, 20250.7231x1.0193x
Nov 26, 20250.7241x1.0264x
Nov 28, 20250.7281x1.0320x
Dec 1, 20250.7087x1.0272x
Dec 2, 20250.7269x1.0291x
Dec 3, 20250.7631x1.0327x
Dec 4, 20250.7775x1.0335x
Dec 5, 20250.7704x1.0354x
Dec 8, 20250.7502x1.0323x
Dec 9, 20250.7669x1.0314x
Dec 10, 20250.7584x1.0383x
Dec 11, 20250.7768x1.0407x
Dec 12, 20250.7652x1.0295x
Dec 15, 20250.7497x1.0279x
Dec 16, 20250.7394x1.0251x
Dec 17, 20250.7347x1.0138x
Dec 18, 20250.7560x1.0215x
Dec 19, 20250.7650x1.0277x
Dec 22, 20250.7752x1.0341x
Dec 23, 20250.7939x1.0389x
Dec 24, 20250.8040x1.0425x
Dec 26, 20250.7957x1.0424x
Dec 29, 20250.7950x1.0387x
Dec 30, 20250.7847x1.0374x
Dec 31, 20250.7886x1.0297x
Jan 2, 20260.8039x1.0316x
Jan 5, 20260.8154x1.0385x
Jan 6, 20260.8340x1.0447x
Jan 7, 20260.8389x1.0413x
Jan 8, 20260.8528x1.0412x
Jan 9, 20260.8764x1.0481x
Jan 12, 20260.8978x1.0497x
Jan 13, 20260.8825x1.0476x
Jan 14, 20260.9159x1.0425x
Jan 15, 20260.9124x1.0453x
Jan 16, 20260.9052x1.0444x
Jan 20, 20260.9166x1.0232x
Jan 21, 20260.9411x1.0350x
Jan 22, 20260.9585x1.0404x
Jan 23, 20260.9621x1.0408x
Jan 26, 20260.8905x1.0461x
Jan 27, 20260.9056x1.0502x
Jan 28, 20260.8905x1.0501x
Jan 30, 20260.8596x1.0449x
Feb 2, 20260.8474x1.0501x
Feb 3, 20260.8868x1.0412x
Feb 4, 20260.8702x1.0362x
Feb 5, 20260.8424x1.0232x
Feb 6, 20260.8732x1.0429x
Feb 9, 20260.8752x1.0479x
Feb 10, 20260.8471x1.0451x
Feb 11, 20260.8638x1.0449x
Feb 12, 20260.8397x1.0288x
Feb 13, 20260.8423x1.0295x
Feb 17, 20260.8129x1.0311x
Feb 18, 20260.8187x1.0363x
Feb 19, 20260.8217x1.0336x
Feb 20, 20260.8166x1.0411x
Feb 23, 20260.8243x1.0304x
Feb 24, 20260.8354x1.0379x
Feb 25, 20260.8236x1.0467x
Feb 26, 20260.7887x1.0409x
Feb 27, 20260.7801x1.0359x
Mar 2, 20260.8036x1.0365x
Mar 3, 20260.8165x1.0273x
Mar 4, 20260.8324x1.0346x
Mar 5, 20260.8012x1.0288x
Mar 6, 20260.7805x1.0153x
Mar 9, 20260.7964x1.0242x
Mar 10, 20260.8035x1.0226x
Mar 11, 20260.8313x1.0213x
Mar 12, 20260.8352x1.0058x
Mar 13, 20260.8122x1.0001x
Mar 16, 20260.8060x1.0103x
Mar 17, 20260.8130x1.0129x
Mar 18, 20260.8129x0.9988x
Mar 19, 20260.8427x0.9963x
Mar 20, 20260.8185x0.9794x
Mar 23, 20260.8147x0.9897x
Mar 24, 20260.8632x0.9863x
Mar 25, 20260.8599x0.9918x
Mar 26, 20260.8620x0.9741x
Mar 27, 20260.8937x0.9575x
Mar 30, 20260.8477x0.9543x
Mar 31, 20260.8345x0.9820x
Apr 1, 20260.8188x0.9894x
Apr 2, 20260.8439x0.9903x
Apr 6, 20260.8433x0.9950x
Apr 7, 20260.8230x0.9955x
Apr 8, 20260.7960x1.0208x
Apr 9, 20260.7626x1.0267x
Apr 10, 20260.7668x1.0260x
Apr 13, 20260.7737x1.0360x
Apr 14, 20260.7491x1.0487x
Apr 15, 20260.7693x1.0569x
Apr 16, 20260.7592x1.0595x
Apr 17, 20260.7434x1.0723x
Apr 20, 20260.7483x1.0702x
Apr 21, 20260.7773x1.0632x
Apr 22, 20260.7827x1.0740x
Apr 23, 20260.7657x1.0698x
Apr 24, 20260.7512x1.0781x
Apr 27, 20260.7730x1.0799x
Apr 28, 20260.7774x1.0747x
Apr 29, 20260.7765x1.0745x
Apr 30, 20260.7756x1.0852x
May 1, 20260.7705x1.0882x
May 4, 20260.7692x1.0842x
May 5, 20260.7758x1.0929x
May 6, 20260.7864x1.1081x
May 7, 20260.7687x1.1047x
May 8, 20260.7542x1.1138x
May 11, 20260.7669x1.1164x
May 12, 20260.7854x1.1147x
May 13, 20260.7606x1.1209x
May 14, 20260.7659x1.1298x
May 15, 20260.7483x1.1162x
May 18, 20260.7458x1.1154x
May 19, 20260.7345x1.1080x
May 20, 20260.7240x1.1193x
May 21, 20260.7378x1.1215x
May 22, 20260.7425x1.1260x
May 26, 20260.7807x1.1334x
May 27, 20260.7990x1.1332x
May 28, 20260.8399x1.1395x
May 29, 20260.8008x1.1423x
Jun 1, 20260.8391x1.1454x
Jun 2, 20260.8583x1.1470x
Jun 3, 20260.8443x1.1389x
Jun 4, 20260.8611x1.1432x
Jun 5, 20260.8093x1.1137x
Jun 8, 20260.8052x1.1163x
Jun 9, 20260.7839x1.1130x
Jun 10, 20260.7736x1.0954x
Jun 11, 20260.7795x1.1141x
Jun 12, 20260.7976x1.1201x
Jun 15, 20260.7706x1.1398x
Jun 16, 20260.7550x1.1330x
Jun 17, 20260.7674x1.1189x
Jun 18, 20260.7520x1.1276x
Jun 22, 20260.7376x1.1241x
Jun 23, 20260.7234x1.1077x
Jun 24, 20260.7092x1.1072x
Jun 25, 20260.7194x1.1088x
Jun 26, 20260.7147x1.1008x
Jun 29, 20260.7072x1.1189x
Jun 30, 20260.7115x1.1277x
Jul 1, 20260.6936x1.1261x
Jul 2, 20260.6963x1.1247x
Jul 6, 20260.6914x1.1345x
Jul 7, 20260.6819x1.1291x
Jul 8, 20260.6900x1.1256x
Jul 9, 20260.6979x1.1351x
Jul 10, 20260.6920x1.1400x
Jul 13, 20260.7026x1.1313x
Jul 14, 20260.7160x1.1353x
Jul 15, 20260.7049x1.1398x
Jul 16, 20260.6845x1.1336x
Jul 17, 20260.6747x1.1224x
Jul 20, 20260.6737x1.1206x
Jul 21, 20260.6843x1.1299x
Jul 22, 20260.7002x1.1286x
Jul 23, 20260.6834x1.1147x
Jul 24, 20260.6644x1.1158x
Jul 27, 20260.6713x1.1161x
Jul 28, 20260.6674x1.1187x
Jul 29, 20260.6451x1.1015x
Jul 30, 20260.6547x1.1200x
Jul 31, 20260.6384x1.1281x
Aug 3, 20260.6400x1.1441x
Aug 4, 20260.6566x1.1647x
Aug 5, 20260.6643x1.1624x
Aug 6, 20260.6777x1.1606x
Aug 7, 20260.6851x1.1677x
Aug 10, 20260.6938x1.1673x
Aug 11, 20260.6900x1.1636x
Aug 12, 20260.7079x1.1665x
Aug 13, 20260.6939x1.1746x
Aug 14, 20260.7390x1.1723x
Aug 17, 20260.7466x1.1668x
Aug 18, 20260.7298x1.1589x
Aug 19, 20260.7700x1.1613x
Aug 20, 20260.7550x1.1516x
Aug 21, 20260.7822x1.1563x
Aug 24, 20260.7945x1.1529x
Aug 25, 20260.8056x1.1566x
Aug 26, 20260.8025x1.1568x
Aug 27, 20260.8407x1.1644x
Aug 28, 20260.8288x1.1618x
Aug 31, 20260.8544x1.1583x
Sep 1, 20260.8449x1.1503x
Sep 2, 20260.8541x1.1554x
Sep 3, 20260.8061x1.1675x
Sep 4, 20260.8331x1.1630x
Sep 8, 20260.8284x1.1566x
Sep 9, 20260.8245x1.1513x
Sep 10, 20260.8019x1.1444x
Sep 11, 20260.7860x1.1541x
Sep 14, 20260.7530x1.1490x
Sep 15, 20260.7396x1.1437x
Sep 16, 20260.7415x1.1387x
Sep 17, 20260.7399x1.1516x
Sep 18, 20260.7106x1.1502x
Sep 21, 20260.7111x1.1680x
Sep 22, 20260.7379x1.1678x
Sep 23, 20260.7194x1.1594x
Sep 24, 20260.7055x1.1585x
Sep 25, 20260.7040x1.1648x
Sep 28, 20260.7006x1.1561x
Sep 29, 20260.6762x1.1540x
Sep 30, 20260.6742x1.1516x
Oct 1, 20260.6772x1.1537x
Oct 2, 20260.6785x1.1622x
Oct 5, 20260.6851x1.1700x
Oct 6, 20260.6938x1.1765x
Oct 7, 20260.6815x1.1736x
Oct 8, 20260.6929x1.1687x
Oct 9, 20260.7003x1.1757x

Themes and category

Energy MaterialsEnergy & MaterialsDefensive

Methodology and caveats

QuantLink fetches this idea from the live FastAPI ideas endpoints and renders the returned title, thesis, holdings, themes, benchmark, and tearsheet fields directly. Missing fields are left unavailable rather than fabricated.

Holdings are a curated model basket. They are not 13F filings, not insider filings, not adviser holdings, and not a claim that any person or fund owns the basket.

Backtested performance depends on the returned basket weights, benchmark, rebalancing assumptions, available price history, and calculation choices in the tearsheet endpoint. Backtests can differ materially from live results and do not include every cost, tax, capacity, liquidity, or execution constraint an investor may face.

Equal-weight and target-weight baskets can drift between rebalance points. Rebalancing can increase turnover, and concentrated thematic baskets can have higher drawdowns than a broad market benchmark.

Frequently asked questions

Research the stocks behind this idea

Use QuantLink's screener and company pages to inspect fundamentals, valuation, and market data after reviewing the public thesis.

Related links

QuantLink is a research tool, not investment advice. This page shows a curated model basket and backtested performance, not a filed portfolio, fund return, or recommendation to buy or sell securities.