For all of the attention paid to Freeport-McMoRan's (FCX)
issues and challenges with the Indonesian government, it hasn't hurt
the stock all that much recently. The shares are up close to 30% over
the past year, trailing First Quantum (OTCPK:FQVLF), but otherwise surpassing mining equities with big copper exposure like BHP Billiton (BHP), Antofagasta (OTCPK:ANFGY), Southern Copper (SCCO), and Glencore PLC.
That strikes me as a pretty rational response, as although Indonesia is
still important to Freeport, that importance declines pretty sharply
within a decade and Freeport still has some valuable cards of its own to
play.
My basic bullishness on Freeport is predicated on a few
factors. First, I think Freeport has a strong collection of
copper-producing properties around the world that have offset the
political/operating risks in any one location. Second, I think copper is
a good place to be in the coming years. Third, I think deepwater Gulf
of Mexico E&P assets are still undervalued. Last, I think there's
still an "Indonesia discount" in place that overstates the actual value
risks to Freeport. All in all, I think these shares should trade closer
to $40.
Read more here:
Turbulence In Indonesia Is Manageable For Freeport-McMoRan
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