The Whitehaven Coal Ltd (ASX: WHC) share price has taken a dive of over 5% after one of its institutional backers sold out.
Whitehaven is one of the largest coal miners in Australia. It has benefited enormously from the big increase in energy prices as countries looked for other sources of energy.
However, coal prices may not stay high forever and winter is nearly over in the northern hemisphere. It has been a warm winter in Europe, so less energy may have been consumed.
With a possible peak of coal prices in the past, and prices stabilising, that could mean that the ASX coal miners have seen their strongest level of profitability.
Under those circumstances, it's understandable why some investors may be selling out and finding other investment opportunities.
Fund manager sells out
According to reporting by The Australian, the All Ordinaries Index (ASX: XAO) fund manager GQG Partners Inc (ASX: GQG) has sold a significant number of shares.
GQG sold $336 million of Whitehaven shares through investment bank JPMorgan for a price of $7.90 each. The current price is 5% lower than GQG's sale price.
The Australian noted that GQG had a 5.36% stake in the business.
What to make of this for Whitehaven shares?
Since 21 December 2022, the Whitehaven share price has dropped by around 30%.
The latest quarterly update from the ASX coal share gave some insights into what's going on.
In the three months to December 2022, it achieved an average coal price of A$527 per tonne, compared to A$581 per tonne in the three months to September 2022.
The company is expecting to report that in the first six months of FY23, it made around $2.6 billion of earnings before interest, tax, depreciation and amortisation (EBITDA) – up from $0.6 billion in the first half of FY22.
It made around $1 billion of cash flow in the three months to December 2022 and around $2.5 billion in the FY23 first half. It finished the period with a net cash position of $2.5 billion.
Whitehaven also reported that its managed run-of-mine production was 4.8 million tonnes, up 21% from the three months to September 2022.
The business is continuing to make major profits, even if sentiment is falling. It is carrying out a major share buyback program and large dividends are also expected.
According to Commsec, it could pay a grossed-up dividend yield of 18%, which is still a high yield.
