🥉Now that Copper prices $COPPER are at all time high and our initial investments in FreePort-McMoran $FCX are over 360%, should we take profits? FreePort-McMoran is not only the best performing stock in our portfolio in the last year (ignoring GameStop $GME ), 𝙞𝙩 𝙞𝙨 𝙖𝙡𝙨𝙤 𝙤𝙣𝙚 𝙤𝙛 𝙩𝙝𝙚 𝙗𝙚𝙨𝙩 𝙥𝙚𝙧𝙛𝙤𝙧𝙢𝙞𝙣𝙜 𝙤𝙛 𝙩𝙝𝙚 𝙎&𝙋 𝟱𝟬𝟬 $SPX500 gaining over 600%. Since everybody is greedy now, should we be fearful?
🥉Copper is the second-best electrical conductor after Silver and is widely used in construction and electrification. The demand for Copper in recent years has been increasing because of construction in China, and renewable energies, and Electrical vehicles. Normally, 𝙖𝙣 𝙀𝙑 𝙪𝙨𝙚𝙨 𝟰 𝙩𝙞𝙢𝙚𝙨 𝙢𝙤𝙧𝙚 𝙘𝙤𝙥𝙥𝙚𝙧 𝙩𝙝𝙖𝙣 𝙖𝙣 𝙄𝘾𝙀 𝙫𝙚𝙝𝙞𝙘𝙡𝙚. The economic recovery and higher inflation can also be a boon for copper.
📈 However, the supply is not here to meet the demand and we are going into a 𝘾𝙤𝙥𝙥𝙚𝙧 𝙎𝙪𝙥𝙥𝙡𝙮 𝙂𝙖𝙥. When Copper prices peaked in 2011, the inventories were 200 000 metric tons. Today, we only have 130 000 metric tons in inventories.
⛏️The reason why I chose FreePort-McMoran over other copper miners is because of its high production cost and I was very confident that we will have a copper supply gap that it made sense to invest in a 𝙝𝙞𝙜𝙝-𝙘𝙤𝙨𝙩 𝙥𝙧𝙤𝙙𝙪𝙘𝙚𝙧 𝙬𝙝𝙞𝙘𝙝 𝙞𝙨 𝙫𝙚𝙧𝙮 𝙨𝙚𝙣𝙨𝙞𝙩𝙞𝙫𝙚 𝙩𝙤 𝙘𝙤𝙥𝙥𝙚𝙧 𝙥𝙧𝙞𝙘𝙚𝙨. However, during a copper bear market, it can be risky to hold FreePort-McMoran.
💸 𝙁𝙪𝙣𝙙𝙖𝙢𝙚𝙣𝙩𝙖𝙡𝙨 𝙤𝙛 𝙁𝙧𝙚𝙚𝙋𝙤𝙧𝙩-𝙈𝙘𝙈𝙤𝙧𝙖𝙣 have improved and they have restarted paying a dividend and considering share buybacks. FreePort-McMoran also produces Gold $GOLD but Copper affects the price more.
💰In a very conservative analysis, I'll say that it is above its intrinsic value but can still go up because the copper 𝙗𝙪𝙡𝙡 𝙢𝙖𝙧𝙠𝙚𝙩 𝙝𝙖𝙨 𝙧𝙚𝙖𝙡𝙡𝙮 𝙟𝙪𝙨𝙩 𝙨𝙩𝙖𝙧𝙩𝙚𝙙. Of course, copper prices are volatile and in the short term, anything can happen. But over the long term, I'm still bullish on copper and FreePort-McMoran.
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