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What do the top hedge fund and mutual fund gurus like in the metals mining industry? This article, the twenty-first in a series, identifies through a search of the latest available institutional 13-F filings the gurus that are most invested in the Industrial Metals and Mining industry, and the specific stocks within the industry they prefer to hold in their portfolios. The industry includes miners of metals such as copper, iron, zinc, aluminum, metal ores, molybdenum, palladium, platinum, uranium as well as rare earth mining companies.

Also, please note that this article will be among the last in this series, as the latest March 2011 quarter 13-F institutional filings are now beginning to come out. About 40% were out as of this weekend, and most should be filed by the end of this week. Please check my article page for previous articles in this series.

A "guru" is defined as someone who is regarded as having great knowledge, wisdom, and authority in a certain area. When it comes to hedge funds, there are a number of ways to anoint leading managers as gurus including long-term performance, low portfolio volatility and an elite reputation in the investment community.

Many of us are familiar with leading investors and hedge fund managers such as Warren Buffet, George Soros, Carl Icahn and Julian Robertson, but the hedge fund community alone includes over 9,000 funds; add in mutual funds, ETFs, and other investment entities and the number is likely to be at least two to three times that number. While there is no official list of gurus, less than one percent or between 100 to 200 fund managers are commonly believed by the larger investment community to have earned the distinction of being called "gurus".

The study of the investing habits of Gurus can be informative as these are very savvy, well-respected investors with high personal net worth deploying large sums of capital from their funds on a regular basis. They have a long-term track record of success, and while one can easily just ride their coattails, the savvy investor may want to use these lists as a starting point to conduct their own due diligence.

The total capitalization of the US Equity markets is somewhere in the $15 trillion range, and the total market capitalization of leading metal mining companies is $175 billion which is almost 1.2% of the overall market. The table lists the top five funds that have more than 5% invested in metal mining companies.

As you will see, noticeably absent from the list are rare earth companies Molycorp Inc. (MCP), engaged in the mining and processing of rare earth ores at the mountain pass facility near the CA/NV border; Rare Element Resources (REE), a Canadian company engaged in the acquisition and exploration of gold and rare-earth elements in North America; Avalon Rare Metals Inc. (AVL), a Canadian company engaged in the exploration and development of rare metals and minerals; and China Shen Zhou Mining & Resources (SHZ), a Chinese company engaged in the exploration, development, mining and processing of fluorite, copper, zinc, lead and rare earth elements in China.

These stocks have been extremely volatile in the last six to nine months as there are strong disagreements between the bulls and the bears, with the bears taking the position that the rare earth prices and hence the prices of these stocks have reached a cyclical peak as more rare earth production comes online, while the bulls maintain that the long-term trend in rare earth prices is up as demand may continue to out-strip supply. It seems that the Fund Gurus have cast their vote, as none of these Gurus whose funds are over-concentrated in the Metals Mining Industry hold a major position in rare earth companies.

The following is a list of their picks in that Sector:

  • Freeport McMoran Copper & Gold (FCX) engaged in the exploration and development of copper, gold, silver, molybdenum mines in Indonesia, Northa and South America.
  • BHP Billiton Ltd ADR (BHP and BBL), an Australian company engaged in the mining of base metals, iron ore, oil, gas, diamonds, and coals.
  • Cameco Corp. (CCJ), a Canadian Company engaged in the exploration, refining and conversion of uranium in the United States, Canada and Kazakhstan.
  • Uranium Energy Corp. (UEC) engaged in the exploration, acquisition and development of uranium properties in TX, WY, NM, AZ, CO, and UT.
  • Denison Mines Corp. (DNN), a Canadian Company engaged in uranium exploration and production in Canada, U.S., Mongolia and Zambia.
  • Horsehead Holding Corp. (ZINC), a producer of zinc and zinc-based products with production facilities in PA and OK.


Fund and Guru

Type of Fund

Assets Under Management

Percent Equity Portfolio invested in Equities of Companies in the Metals Mining Industry

Major Metals Mining company positions in Portfolio

Woodbine Capital Advisors LP (Josh Berkowitz)

Hedge Fund - Global Macro

$440 million

11.2%

FCX

CQS Cayman LP (Michael Hintze)

Hedge Fund - Multi-Strategy

$6.5 billion including $910 million invested in US Equities

10.5%

BBL, BHP, CCJ, UEC, DNN

Capital Growth Management LP (Ken Heebner)

Mutual Fund Manager

$6.8 billion

6.7%

FCX, BHP

Touradji Capital Management, LP (Paul Touradji)

Hedge Fund - Commodities Focused

$2.5 billion including $280 million in Equities

5.4%

FCX

Pabrai Investment Funds (Pabrai Mohnish)

Hedge Fund - Value-Driven

$340 million

5.4%

ZINC

Hedge fund Woodbine Capital Advisors was founded by Soros Fund Management alumni Josh Berkowitz and Marcel Kasumovich in 2009, and uses a global macro strategy to make its investments.

London-based Hedge Fund CQS Management, founded by Australian Michael Hintze, uses a multi-strategy approach in making its investments. Its hedge funds include the CQS Convertible and Quantitative Strategies Fund, Credit Long/Short Fund, Directional Opportunities Fund, Asset Backed Securities Fund, Asia Fund, and Diversified Fund.

Ken Heebner, co-founder of Capital Growth Management, manages the CGM family of mutual funds. He has a reputation of making bold sector bets, and was on the cover of the June 9, 2008 issue of Fortune magazine, and was called as America's hottest investor.

Touradji Capital Management, LP, is a commodities-focused hedge fund founded by Paul Touradji. He previously worked as a trader from 1996 to 2000 in Julian Robertson's legendary Tiger Management.

Mr. Pabrai runs a $340 million Hedge Fund. He is a value investor, investing primarily in out-of-favor smaller companies, with a market capitalization of less than half a billion dollars. His portfolio is generally concentrated with less than 10-20 companies (for more detail of Pabrai's fund and his holdings and new picks, please see my previous article on May 5th, 2011.

Credit: Historical fundamentals including operating metrics and stock ownership information were derived using I-Metrix® by Edgar Online®, Zacks Investment Research, DailyGraphs®, Thomson Reuters and Briefing.com. Fund data including assets under management and firm profiles are sourced mostly from Hedgetracker.com. The information and data is believed to be accurate, but no guarantees or representations are made.

Source: Top Metals Mining Picks by Fund Gurus Concentrated in the Sector