Hedge fund managers are currently viewing stocks of companies engaged in extracting key industrial metals with optimism. According to their analysis, there is substantial growth potential in these stocks over the upcoming months.
These fund managers specifically believe that shares of copper mining companies are undervalued at present, anticipating significant growth in the sector throughout the year 2024.
Prominent fund managers at Tribeca Investment Partners, Terra Capital, and Anaconda Invest assert that the supply dynamics for copper will play a crucial role in supporting the stock prices of companies operating within this industry.
In an interview with Bloomberg, Todd Warren, the manager of Tribeca Investments, acknowledged that the surplus supply issues in the copper market from the previous year are likely to transition into a probable deficit in the coming months.
This shift is anticipated in response to the increasing demand for copper, consequently bolstering both copper prices and contributing to the rise of companies engaged in industrial metal extraction.
Matthew Langsford, the manager of the Australian natural resources fund Terra Capital, shares a similar sentiment. He predicts that copper prices will sustain an upward trend, coupled with a surge in demand and limited supply, leading to substantial price growth over the next two or three years. Langsford also envisions the potential for a remarkable 50% increase in copper company stocks in 2024 alone.
The manager of Terra Capital, in a conversation with Bloomberg, asserted, "Any earlier expectations of a surplus supply in the copper market are now history and have been replaced by the prospect of a significant deficit." He attributed the low copper supply to restricted investments in new projects and operational challenges faced by some copper mines.
The previous year witnessed the dramatic closure of the Cobre Panama copper mine, owned by the Canadian company First Quantum Mine.
This closure accounted for approximately 1.5% of the global copper supply. First Quantum Minerals' shares suffered a decline of over half their value within a year, and the company is embroiled in a public dispute with the government of Panama, anticipating substantial compensation.
Interestingly, despite a mere 2% increase in copper prices last year, following a nearly 15% decline in 2022, the current valuation stands at over $8,500 per ton. Analysts are increasingly optimistic about the future of this industrial metal, citing factors such as revived demand in China and ongoing interest rate cuts in various economies, starting with the USA.
Additionally, the role of copper in the energy transition, constituting nearly one-fifth of the mass of batteries used in electric vehicles, adds to its positive outlook.
Goldman Sachs analysts concluded at the end of the previous year that the price of copper is expected to rise to $10,000 per ton by the conclusion of 2024.
In terms of hedge fund investments, prominent positions include Canadian NGEx Minerals, which experienced a remarkable 180% growth in the past year, Capstone Copper Corp, listed on the Canadian stock exchange, and Freeport-McMoRan, a company listed on the NYSE.
04.02.2024
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