Greenlight Capital, an investment management firm, published its “Global Growth Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly return of -2.9% was recorded by the fund for the second quarter of 2021, compared to 8.5% for its e S&P 500 benchmark. You can view the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Greenlight Capital, the fund mentioned Teck Resources Limited (NYSE: TECK), and discussed its stance on the firm. Teck Resources Limited is a Vancouver, Canada-based mining company, that currently has an $12.1 billion market capitalization. TECK delivered a 25.84% return since the beginning of the year, extending its 12-month returns to 125.47%. The stock closed at $22.84 per share on July 30, 2021.
Here is what Greenlight Capital has to say about Teck Resources Limited in its Q2 2021 investor letter:
“Copper (and other basic materials) The last boom in mining ended badly in 2009. The result is that mining companies have been loath to develop new mines over the last decade. The current development pipeline of new copper mines is down 60% from what it was in 2008. While a few mines are set to come online in 2022 and 2023, by mid-decade, supply is expected to start shrinking. It takes about 8 to 10 years to develop a copper mine.
Meanwhile, the electrification of the automobile industry and expansion of green energy will create substantial new demand for copper. Prices are up some already, but it is difficult to see why they won’t be much higher a few years from now.
We own Teck Resources (TECK), which is one of the few copper miners that are poised to expand to take advantage of this dynamic as it has a new mine coming on-line in 2022. TECK trades at 7x this year’s consensus earnings estimates that obviously don’t include contribution from the pending new mine. We presented this thesis more fully at this year’s Sohn Conference.”
Mark Agnor/Shutterstock.com
Based on our calculations, Teck Resources Limited (NYSE: TECK) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. TECK was in 30 hedge fund portfolios at the end of the first quarter of 2021, compared to 31 funds in the fourth quarter of 2020. Teck Resources Limited (NYSE: TECK) delivered a 7.89% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage.
Disclosure: None. This article is originally published at Insider Monkey.
