Hedge fund managers from Tribeca Investment Partners, Terra Capital and Anaconda Invest are expecting significant gains for copper stocks in 2024, according to a report by Bloomberg.
Copper is a commonly used indicator for the global economy. The red metal gained only 2% last year following a 14% decline in 2022.
According to the report, the funds have attributed their bullish bets to supply dynamics supporting price increases this year.
Todd Warren, a Portfolio Manager at APAC-based Tribeca, referring to a series of recent production disruptions including mine supply issues in Latin America, said that the upshot was that what had looked like a clear case of excess supply has now morphed into a likely deficit.
He said: “We see a very strong trade in the foreseeable future, primarily because of the supply challenge.”
Matthew Langsford, a Portfolio Manager at Sydney-based Terra Capital, expected “at least 50% upside” in prices by the end of 2024.
He said that any lingering expectations of surplus supply have now “evaporated” and been replaced with the prospect of a “significant deficit”, which underscores “the fragility of supply in markets where there has been very little capex for new projects”, or where even sustaining and maintaining existing operations has been a challenge over the past decade.
Terra’s copper stocks include NGEx Minerals, which soared more than 130% in 2023 and is up about 19% so far in 2024, as well as Capstone Copper, which gained more than 30% in 2023 and has started this year with an additional 3%. Tribeca’s picks include Freeport-McMoRan, which gained 12% last year but is down about 6% this year. Both funds have said that they will add to their holdings of copper stocks.
Renaud Saleur, Founder and CEO at Geneva-based Anaconda, said that copper’s longer-term supply dynamics underpin its appeal, given its role in feeding the technology needed for the green transition. He added that copper is proving a better bet than more traditional transition assets such as wind and solar, with the S&P Global Clean Energy Index down more than 20% last year.
Anaconda’s stocks include Lundin Mining, which gained than 30% in 2023, as well as Freeport-McMoRan.
The report also cites a letter in which Pierre Andurand told investors in his hedge fund, Andurand Capital Management, that he expected copper prices to rise this year despite positions in the base metal backfiring in 2023. He listed decreasing ore grades, rising costs, water scarcity and social unrest as affecting balances, adding that price dips represent opportunities to buy.
