1. Freeport-McMoRan Inc. (NYSE:FCX)
Number of Hedge Fund Holders: 66
Freeport-McMoRan Inc. (NYSE:FCX) is an Arizona-based minerals and mining firm. On April 21, the company posted earnings for the first quarter of 2022, reporting earnings per share of $1.07, beating estimates by $0.15. The revenue over the period was $6.6 billion, up more than 36% year-on-year and beating expectations by $310 million. The firm expects to sell 4.25 billion pounds of copper, 1.6 million ounces of gold and 80 million pounds of molybdenum in fiscal year 2022, with capital expenditures during the time estimated at around $4.6 billion.
On April 5, Deutsche Bank analyst Abhi Agarwal kept a Hold rating on Freeport-McMoRan Inc. (NYSE:FCX) stock and raised the price target to $50 from $42, identifying increased copper price futures as one of the main reasons behind the target raise.
At the end of the fourth quarter of 2021, 66 hedge funds in the database of Insider Monkey held stakes worth $3.7 billion in Freeport-McMoRan Inc. (NYSE: FCX), the same as in the preceding quarter worth $3.2 billion.
In its Q4 2021 investor letter, Horizon Kinetics LLC, an asset management firm, highlighted a few stocks and Freeport-McMoRan Inc. (NYSE:FCX) was one of them. Here is what the fund said:
“Those were some ideas about copper demand. Here are some specifics about supply. Global copper mine production in the 10 years from 2005 to 2015 rose 2.45% annually. In the next 5 years, to 2020, it increased by only 0.9% annually. Even ignoring the 2020 pandemic year, for the 4 years from to 2019, the expansion rate was 1.66%. We already have the historical context for this: the commodity price collapse prior to 2015, from a position of excess capacity.
What producers must do in that situation, because they have high fixed costs and debt expense, is curtail their exploration and development expenditures and reduce operating costs. They rely on existing mines, instead, and on their highest-grade ores and lowest-cost production. They might not actually reduce current production, but they aren’t replacing the reserves that are being slowly drawn down. You can see this at work at the individual company level.
Freeport-McMoRan Inc. (NYSE:FCX) will illustrate. It is the world’s third-largest copper producer, closely following Chile’s Codelco and Australia’s BHP Group. In 2014, even though Freeport sold more copper than the prior year, its revenues dropped by over 25%, and it went from $4.8 billion of operating earnings (a 22% margin) to a $(0.2) billion loss. The company’s capital expenditures peaked in 2014 at $3.86 billion and will be about $1.72 billion in 2021, meaning the company is spending 55% less now than it was seven years ago. In inflation-adjusted terms, it’s spending 61% less today than seven years ago…” (Click here to see the full text)
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