2. Teck Resources Limited (NYSE:TECK)
Number of Hedge Fund Holders: 68
Teck Resources Limited (NYSE:TECK) is a Canadian company that focuses on mining and producing essential metals, primarily copper and zinc. The company operates several mines across North and South America, including Antamina, Highland Valley Copper, Red Dog Mine, and Carmen de Andacollo.
Management recently transformed its business strategy to concentrate on energy transition metals, which are essential for the shift towards renewable energy and electric vehicles (EVs). This change was marked by the sale of its steelmaking coal business to Glencore for $7.3 billion, completed on July 11, 2024. This divestment allows Teck Resources Limited (NYSE:TECK) to focus primarily on its copper and zinc operations, which are crucial for supporting low-carbon technologies.
In addition, the company has been making significant progress towards its copper growth strategy. During the third quarter of fiscal 2024, Teck Resources Limited (NYSE:TECK) delivered an adjusted EBITDA of $986 million driven by record copper production at its Quebrada Blanca (QB) mine. The mine produced 52,500 tonnes of copper in Q3 2024, which is an increase from 51,300 tonnes in Q2 2024. Moreover, the mill throughput rates also increased, confirming that the plant’s design is robust. Management anticipates reaching the design throughput rates by the end of 2024, which would enhance overall production efficiency. Looking ahead, management has updated its guidance for QB mine copper production to a range of 240,000 to 280,000 tonnes, along with molybdenum production expected between 4.0 to 5.5 thousand tonnes. It is one of the best copper stocks to buy according to hedge funds.
Greenlight Capital stated the following regarding Teck Resources Limited (NYSE:TECK) in its first quarter 2024 investor letter:
“Finally, we established a medium-sized macro position to benefit from higher copper prices. Long-time partners may recall that in 2021 we presented Teck Resources Limited (NYSE:TECK) at the Sohn Investment Conference. At the time, our thesis was based on a combination of being bullish on copper and believing that TECK was about to exit the penalty box after a multi-year investment in a new copper mine that was on the brink of finally coming online. Back then, TECK traded at C$31.09. Based on copper at $4.50 a pound, we thought the stock was undervalued by half. It has since doubled (and dramatically outperformed copper peer Freeport-McMoRan) and, over time, we have reduced the position into strength.
As we showed on this slide from our 2021 presentation, our thesis was that after several new mines, including TECK’s, there would not be new supply available in the second half of this decade.
Time has passed, the new mines have come online and the anticipated gap between supply and demand is likely to open up in the next year. While we still believe TECK is undervalued should copper prices rise, it is less undervalued than it once was. Our thesis now is that copper supply is about to fall short of demand, forcing prices substantially higher. Once again, we think the best way to invest in that thesis is the most direct way – in this case through options on copper futures.”
