Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) took a punishing hit in the market in early December. At that time the company announced that it would be acquiring Mcmoran Exploration Co (NYSE:MMR), a company which had split from the larger Freeport-McMoRan organization some time ago, and Plains Exploration & Production Company (NYSE:PXP) at high premiums to where those stocks were currently trading. This made Freeport-McMoRan, a copper and gold producer which traders had often used as a global growth barometer, a significant oil producer as well. Between the general finding that M&A tends to destroy shareholder value, the reduced focus of the business, and the high transaction price, shareholders were not happy with the company’s decision. Read our initial coverage of the deal. We’d also note that Plains had previously bought a number of BP plc (NYSE:BP)’s offshore Gulf of Mexico assets, at what at the time had been considered generous prices.
Shortly after the deal, we noticed that billionaire Leon Cooperman’s Omega Advisors had bought shares in Mcmoran Exploration; we’d attributed that entirely to a merger arbitrage play. However, the hedge fund manager apparently thinks that the combined company is going to be a value opportunity as well. According to an interview on CNBC, Cooperman actually thought that the acquisition was a good thing for Freeport-McMoRan; as a result, the decline in the stock price since the announcement has made it even more attractive.
Omega has been buying the stock, after not reporting a position in its 13F filing for the third quarter of 2012 (see Cooperman's stock picks). Billionaires George Soros and Israel Englander had thought it was a good time to buy Freeport-McMoRan Copper & Gold Inc., increasing their own stakes in the company between July and September (find more stock picks from George Soros and from Englander's Millennium Management). Point State Capital, a hedge fund managed by Sean Cullinan and other former employees of billionaire Stanley Druckenmiller’s Duquesne Capital, was the largest holder of the stock in our database of 13F filings with a position of 2.9 million shares.
Does it make sense to join Cooperman in Freeport-McMoRan?