7. Freeport-McMoRan Inc. (NYSE:FCX)
Number of Hedge Fund Holders in Q2 2024: 79
Freeport-McMoRan Inc. (NYSE:FCX) is one of the biggest mining companies in the world. The firm produced 1.1 billion pounds of copper, which is a key resource for today’s electrification wave. Freeport-McMoRan Inc. (NYSE:FCX) benefits from its sizeable scale, as it allows it to have access to stable production sites that enable it to scale production or reduce it without incurring significant capital expenditure. In the age of AI stocks powering Wall Street, the firm’s shares are up 15% year to date. While this might seem surprising, the ‘modest’ returns are also because of Freeport-McMoRan Inc. (NYSE:FCX)’s exposure to copper. Since China is one of the world’s biggest copper consumers, weakness in its economy also means that copper producers face pessimistic investors. However, the reverse is also true, as after the Chinese government announced a staggering stimulus package, Freeport-McMoRan Inc. (NYSE:FCX)’s stock soared by 7%. Simply put, growth in electrification helps the stock, while industrial slowdowns affect it.
Freeport-McMoRan Inc. (NYSE:FCX)’s management directly addressed concerns about China during the Q2 2024 earnings call:
“We’ve discussed on prior calls, the impact of macro sentiment and investor positioning that can drive large moves in pricing. Richard referred to the domestic economic challenges in China, the ongoing weakness in the Chinese property market, destocking and working capital management and increase in copper exchange inventories and delays in actions to stimulate economic growth, which have all weighed on the market. In the U.S., we’re seeing — continuing to see strong demand for copper from a broad range of sectors. And globally, we favorable demand drivers for the future associated with copper’s increasingly important role in the global economy. Copper is a foundational essential metal when it comes to electrification, and the world is becoming more and more focused on copper-intensive energy applications.
The facts are its physical characteristics and superior conductivity make it the metal of electrification. New massive investment in the power grid, renewable generation, technology infrastructure and transportation are driving increased demand for copper and forecast call for above-trend growth and demand for the foreseeable future. As we review the fundamentals and match the demand side up with supply, we look at the limitations of existing supply growth, the challenges and extended time frames required to build new supplies and projections for peak mine supply over the next couple of years. These factors, combined with secular demand trends point to tight market conditions as we go forward. With Freeport’s leading position in the industry, large-scale current operations and future growth pipeline, we’re very well positioned to benefit from this fundamental outlook in the future.”
