Inside A Slaughter: Why Freeport McMoRan (FCX) Lost 16%

Though Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) was subjected to an absolute slaughter,both Mcmoran Exploration Co (NYSE:MMR) and Plains Exploration & Production Company (NYSE:PXP) had astonishing trading sessions. MMR hit its 52-week high by jumping from $8.46 to $15.82, a gain of 87%. That stock also traded more than 86 million shares on Wednesday, crushing its average of around 4 million shares. Plains Exploration & Production Company (NYSE:PXP) shot up from $36.05 to $44.50, a gain of 23.4%. PXP traded nearly 57 million shares though it had been averaging under 4 million shares prior to the acquisition [see also How To Lose Money Investing In Commodities].

What To Do With FCX?

The big question that investors need to ask themselves is whether or not this will have a marked impact on the long-term health of the company. After all, we have seen a number of acquisitions looked on unfavorably by the market, only to watch the stock regain lost ground once the news blows over. If you fall under that camp, Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) is at an absolute steal right now, and it may be time to either add to or start a position in the stock.

However, if you are less than a fan of the new deal and see long-term ramifications for FCX, you are in a bind. Selling right now will certainly protect you from further losses, but when a sell-off of this magnitude occurs, there is typically a small recovery in price shortly afterwards. It may be worth placing a stop-loss at your absolute minimum and waiting out to see if Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) can gain back some lost ground before you exit.

This article was originally written by Jared Cummans, and posted on CommodityHQ.