Metals Miners as represented by the SPDR S&P Metals and Mining ETF (NYSEARCA:XME) are flat for the year, after giving back gains from a new year's rally in January that carried the average stock in the group up 16% in the first five weeks of the year. In this article, via an analysis based on the latest available Q4 institutional 13-F filings, we identify the metals mining companies that are being accumulated and those being distributed by the world's largest fund managers, managing between $50 billion and over $700 billion in 13-F assets. Taken together these mega fund managers control over 35% of the assets invested in the U.S. equity markets, but number just over 30 out of the tens of thousands of funds that invest in the U.S. equity markets. Also, taken together, they are bearish on the group, cutting a net $1.30 billion in Q4 from their $25.25 billion prior quarter position (for more general information on these mega funds, please look at the end of the article).
The following are metals mining companies that these mega fund managers are most bullish about (see Table):
Southern Copper Corp. (SCCO): SCCO is one of the largest integrated copper producers in the world, and is engaged in the mining, exploring, producing, smelting and refining of copper and other minerals in Peru, Mexico and Chile. Mega funds together added a net $10 million in Q4 to their $1.05 billion prior quarter position in the company, and taken together mega funds hold 3.9% of the outstanding shares. The top buyer was Bank of New York Mellon Corp. ($37 million), and top holders were Blackrock Institutional Trust Co. ($206 million) and State Street Corp. ($170 million).
SCCO shares are about flat for the year after a strong January rally that lifted shares to almost 20% at their peak. Its shares retreated after a disappointing Q4 in mid-February in which it missed analyst earnings and revenue estimates, and they trade at a current 11.1 P/E (on a TTM basis) and 6.3 P/B compared to averages of 11.6 and 0.7 for its peers in the non-ferrous mining group.
Sterlite Industries (India) Ltd. (SLT): Sterlite is India's largest diversified metals and mining company, and produces aluminum, copper, zinc, lead, silver and commercial energy, with operations in India, Namibia, South Africa and Ireland. Mega funds together added a net $8 million in Q4 to their $75 million prior quarter position in the company. The top buyer was Bank of New York Mellon Corp. ($7 million), and top holders were Credit Suisse ($18 million) and Bank of New York Mellon Corp. ($18 million).
SLT just released limited production results for Q4 (March) of 2012 on Tuesday, reporting record quarterly production of lead, silver and power. Its shares are up about 23% YTD, after a sharp rally that carried shares up almost 60% earlier this year. Its shares trade at a current 6.3 P/E and 3.2 P/B compared to averages of 11.6 and 0.7 for its peers in the non-ferrous mining group.
Besides these, mega funds based on their Q4 trading activity indicated that they are bearish on the following metals mining stocks (see Table):
- Alcoa Inc. (AA), that is engaged in the production and management of aluminum, fabricated aluminum, and alumina, in which mega funds together cut a net $364 million in Q4 from their $3.35 billion prior quarter position in the company;
- Rio De Janeiro, Brazil-based Vale SA (VALE), that is one of the world's leading mining companies, and specializes in the mining of iron ore and pellets, manganese, alloys, gold, copper, potassium, and kaolin, in which mega funds together cut a net $309 million in Q4 from their $4.79 billion prior quarter position in the company;
- Cliffs Natural Resources (CLF), that is a mining and natural resources company that produces iron ore pellets, lumps and fines iron ore, and metallurgical coal products, in which mega funds together cut a net $279 million in Q4 from their $3.77 billion prior quarter position in the company;
- Freeport McMoran Copper & Gold (FCX), engaged in the exploration and development of copper, gold, silver and molybdenum mines in Indonesia, North and South America, in which mega funds together cut a net $203 million in Q4 from their $10.88 billion prior quarter position in the company;
- Rio Tinto Plc (RIO), a U.K.-based company with global interests in mining that is engaged in mining for aluminum, borax, copper, gold, iron ore, lead, silver, tin, zinc, uranium, titanium, diamonds, talc and zircon, in which mega funds together cut a net $154 million in Q4 from their $901 million prior quarter position in the company; and
- Taseko Mines Ltd. (TGB), a copper and gold miner with operations in British Columbia, Canada, in which mega funds together cut a net $1 million in Q4 from their $8 million prior quarter position in the company.
General Methodology and Background Information: The latest available institutional 13-F filings of over 30+ mega hedge fund and mutual fund managers were analyzed to determine their capital allocation among different industry groupings, and to determine their favorite picks and pans in each group. These mega fund managers number less than one percent of all funds and yet they control almost half of the U.S. equity discretionary fund assets. The argument is that mega institutional investors have the resources and the access to information, knowledge and expertise to conduct extensive due diligence in informing their investment decisions. When mega Institutional Investors invest and maybe even converge on a specific investment idea, the idea deserves consideration for further investigation. The savvy investor may hen leverage this information either as a starting point to conduct his own due diligence.
This article is part of a series on institutional holdings in various industry groups and sectors, and other articles in the series for this and prior quarters can be accessed from our author page.
Credit: Fundamental data in this article were based on SEC filings, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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