1. Freeport-McMoRan Inc. (NYSE:FCX)
Appaloosa Management’s Stake Value: $36,808,000
Percentage Of Appaloosa Management’s 13F Portfolio: 1.47%
Number of Hedge Fund Holders: 68
PE Ratio as of June 23: 8.55
Freeport-McMoRan Inc. (NYSE:FCX) is an American company specializing in the mining and processing of minerals.
Over the last three years, Freeport-McMoRan Inc. (NYSE:FCX) has increased its EPS by 38% each year. The company also recorded a gain of 14% in its EBIT margins during the previous year.
According to Chris LaFemina at Jefferies, Freeport-McMoRan Inc. (NYSE:FCX) is “still underappreciated, still under-owned.” In March, the analyst gave a Buy rating on the stock and increased the price target from $58 to $65. Freeport-McMoRan Inc. (NYSE:FCX) is currently valued at $29 per share with a PE ratio of 8.55x as of June 23. LaFemina believes that Freeport-McMoRan Inc. (NYSE:FCX) is trading at a significant discount to its net present value and is expected to generate strong capital returns in the following years.
Horizon Kinetics LLC presented its insights on Freeport-McMoRan Inc. (NYSE:FCX) in its Q4 2021 investor letter. Here’s what the firm 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 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)
As of Q1 2022, Freeport-McMoRan Inc. (NYSE:FCX) was held by 68 hedge funds.
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