Revisiting My Freeport McMoran Call

The stock has run, but nothing unusual.  It barely made a 52 week high with copper prices at all time highs and the company is executing.  The stock is undervalued.

- slim1216, comment on SeekingAlpha, April 24, 2008

This is the time to get on board, not jump ship.

- stephen rosenman, comment on SeekingAlpha, April 24, 2008

FCX is undervalued here simply on copper valuations..... We might take some short-term licks since most, like you, fail to truly grasp the situation.  But the stock will continue to vastly outperform the market...

- auminer, comment on SeekingAlpha, April 25, 2008

Wow, that certainly is one contrarian view you got going there..... If your short is to find a few bucks, yeah, that can happen, but if you looking for a big down side move, then I think you are in for some pain.

- redrum, comment on SeekingAlpha, April 26, 2008

On April 23, 2008 I wrote a post titled “Freeport Valuation Bloated Here:”

I think there’s a very thin margin of error here and if copper prices come down, Freeport will get hammered.

It’s had a great run but I can’t help thinking it has to come to an end.

When I wrote the post, Freeport was at $118.  Interestingly, of the eight commenters on the post at SeekingAlpha, every single one of them was skeptical and critical of my call.

Yesterday, 3 1/2 months later, Freeport was getting crushed on heavy volume down to around $80 - a 32% drop in the 3 1/2 months since I put up the post (FCX 6 Month Chart).

I covered our short position yesterday.

Disclosure: Top Gun has no position in Freeport McMoran shares.

Comments

[auminer1:]

Chapeau! Looks like I failed to grasp the situation, not you. Who'd have thunk that Airlines & Mortgage Finance companies would've ruled July, though? This is a bipolar market that can't seem to get out from under its own feet... which is why I'm all out (both long and short, not even a 401K) for the first time since I started investing.

2008 Aug 05 05:30 AM

[redbaron:]

Great Call, what else can you say! Wish I had that kind of foresight, or at the very least, had listened. However, I did buy some yesterday.

2008 Aug 05 07:45 AM