1. BHP Group Limited (NYSE:BHP)
Number of Hedge Fund Holders: 22
Short % of Shares Outstanding: 0.41%
Headquartered in Melbourne, Australia, BHP Group Limited (NYSE:BHP) engages in the exploration, development, production, and processing of iron ore, metallurgical coal, and copper. Its Copper segment also includes mining silver, lead, zinc, molybdenum, uranium, and gold, while its coal segment focuses on metallurgical and energy coal.
In Q4 2024, BHP Group Limited (NYSE:BHP) reported a $1.8 billion revenue increase, bringing total revenue to $55.7 billion, driven by higher iron ore and copper prices. This growth was partially offset by lower energy coal and nickel prices, along with reduced steelmaking coal volumes following the Blackwater and Daunia divestment in April 2024. Due to the divestment, the company expects a 23% decline in its steelmaking coal production in 2025.
However, net earnings were $7.9 billion, impacted by $5.8 billion in exceptional charges, including a $2.7 billion impairment on its Western Australia Nickel business and a $3.8 billion charge related to the Samarco Dam incident.
BHP Group Limited (NYSE:BHP) maintained strong liquidity in Q4 2024, generating over $20 billion in net operating cash flow. This solid cash generation allowed the company to reduce its net debt to $9.1 billion while continuing to invest $9.3 billion in growth initiatives.
On 30 August 2024, the South Australian government initiated the application process for BHP’s Olympic Dam expansion. The company aims to increase copper production to 500,000 tons by the early 2030s and possibly 650,000 tons by the mid-2030s.
The stock’s 0.33% rise over the past month is likely driven by optimism surrounding the Olympic Dam expansion and plans to boost copper output. However, the 20.53% YTD decline is mainly due to earlier copper price surges, followed by a drop caused by oversupply and weaker economic indicators, such as sluggish U.S. job openings and demand concerns.
As of Q2 2024, 22 hedge funds, holding a combined investment of $1.3 billion, are bullish on the stock, as per Insider Monkey’s database. Moreover, 0.41% of shares outstanding were sold short, suggesting that most investors do not expect a significant decline in the stock’s value.
BHP is the best coal stock to buy according to short sellers. While we acknowledge the potential of BHP as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BHP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
