15 Best Stocks to Buy According to Hosking Partners

10. Freeport-McMoRan Inc. (NYSE:FCX)

Hosking Partners’ Stake Value: $62,059,381

Percentage of Hosking Partners’ 13F Portfolio: 2.29%

Number of Hedge Fund Holders: 79

Freeport-McMoRan (NYSE:FCX) is a leading global metals company with a primary focus on copper. Founded on November 10, 1987, and based in Phoenix, Arizona, the company operates extensive, long-lived assets across diverse geographic locations, boasting significant proven and probable reserves of copper, gold, and molybdenum. Key assets in their portfolio include the Grasberg minerals district in Indonesia, one of the world’s largest copper and gold deposits, as well as major operations in the Americas, such as the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America.

As one of the largest copper producers in America, Freeport-McMoRan Inc. (NYSE:FCX) enjoys a significant competitive edge, especially since expanding production in the mining industry typically requires substantial capital investment, making it hard for competitors to keep up in the short term. However, this also makes the stock vulnerable to economic downturns, as seen with the reduced demand in China. On the flip side, any economic recovery, particularly through lower interest rates, tends to boost the stock’s performance. This was demonstrated in July 2024 when revised payroll data for May suggested potential Fed rate cuts, leading to a more than 1% increase in Freeport-McMoRan’s stock. Its Grasberg mine is one of the largest globally, giving the company a significant advantage in meeting rising demand. The high setup costs and long lead times in the mining industry allow Freeport-McMoRan to establish key industrial partnerships ahead of potential competitors.

Another mining stock in Hosking Partners’ portfolio, namely, Anglo American performed better in the second quarter of 2024 by 14% when a rival miner BHP proposed a takeover bid. However, Anglo American’s share price has stumbled by 48% since April 2022 due to operational issues at its Los Bronces copper miner in Chile and constant logistical problems at its Kumba iron mine in South Africa.

Hosking Partners, on takeover bid by BHP, stated in its Q2 2024 Quarterly Commentary that,

“Anglo American’s strong contribution was the result of a bid approach by rival miner BHP, and while we are not holders of BHP, it is encouraging that a leading industry participant clearly sees the merit of a “buy rather than build” strategy, suggesting that disciplined capital allocation will continue to support the generation of steady returns on capital by companies in this sector to which we have broad exposure.”