1. Freeport-McMoRan Inc. (NYSE:FCX)
Number of Hedge Fund Holders: 66
Dividend Yield as of May 12: 1.66%
Freeport-McMoRan Inc. (NYSE:FCX) is an Arizona-based minerals and mining firm. In the first quarter of 2022, the gold sales of the company climbed by 59% to 409,000 recoverable oz. During the period, the realized price for gold gained 12% to $1,920/oz. In the first three months of the year, gold sales for the firm were 8% higher than prior guidance of 380,000 oz, primarily reflecting higher recoveries. The stock has gained more than 20% in the past few months as rising inflation increases interest in gold purchases.
Freeport-McMoRan Inc. (NYSE:FCX) posted earnings for the first quarter of 2022 in late April, reporting earnings per share of $1.07, beating market estimates by $0.15. The revenue over the period was $6.6 billion, up 36% year-on-year.
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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