In this piece, we will take a look at eight mining stocks to buy today according to Kerr Neilson’s Platinum Asset Management.
Platinum Asset Management is an Australian hedge fund that is headquartered in Sydney, New South Wales, Australia. It was founded by billionaire Kerr Neilson, who remains at the helm of the firm as its chief investment officer.
Like Tesla and SpaceX billionaire Elon Musk, Mr. Neilson was also born in South Africa, in 1950. He went on to attend the University of Johannesburg and graduate with a bachelor’s degree in Commerce from the institution in 1973. Like some of his other peers in the American hedge fund industry, the now billionaire hedge fund executive demonstrated an interest in the stock market at an early age, after he reportedly bought his first stock at 13 years of age.
Prior to founding his hedge fund, he worked in the finance industry in both London and Australia. However, while Mr. Neilson had graduated in 1973, it would take another two decades before he could call himself a hedge fund founder. He set up Platinum Asset Management in 1994 with the backing of one of the wealthiest hedge fund executives in the world, Mr. George Soros of Soros Fund Management.
Platinum Asset Management takes a global approach to its investments, as it focuses on global, regional, and sector specific investments. One of these, the mining sector, is the subject of our coverage today. His hedge fund’s investment philosophy is based on long-term investments that focus on a company’s fundamentals. This philosophy involves limiting the influence of short-term trends on a company’s stock price and instead investing based on its long-term potential. Mr. Neilson’s success in the industry has also led to some folks dubbing him the ‘Warren Buffett of Australia”. Platinum Asset Management has been ranked as Australia’s largest hedge fund and Asia Pacific’s second-largest fund.
Roughly 13 years after being founded, the hedge fund would go on to list its shares on the Australian stock market (ASX) for an initial public offering (IPO). This would see Neilson, who retained 57% of its shares at the time of listing, become one of the wealthiest people on the planet, with an estimated net worth of AUD2.9 billion ($2.14 billion). As of April 2022, the executive is worth $1.1 billion according to Forbes Magazine. While Mr. Neilson has retired as Platinum Asset Management’s chief executive officer, he remains the firm’s chief investment officer and also has his own portfolio of investments.
Despite the aforementioned laurels, the fund’s history has not been without some troubles. The most notable of these was in 2012 when the fund witnessed a 16% drop in its net profits due to a 14% drop in its investment income. Unlike some other CEOs, Neilson, who was heading the firm at the time, did not take a performance bonus or salary increase. He also did not exercise any share options during the time period. However, the same time period saw Neilson receive AUD42 million ($30.95 million) worth of dividends from his Platinum Asset Management shares.
As of the end of the fourth quarter of last year, Mr. Neilson’s hedge fund had a portfolio worth $3.5 billion, making it one of the largest in the world. Some of the renowned companies in the portfolio were Meta Platforms, Inc. (NASDAQ:FB), Microsoft Corporation (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOG)
Kerr Neilson of Platinum Asset Management
Our Methodology
To pick out Platinum Asset Management’s top mining stocks, we scanned through the firm’s regulatory filings for the fourth quarter of last year. This enabled us to pick out the companies, following which they were analyzed through their quarterly earnings, analyst coverage, investor letters, other large shareholders, and the hedge fund sentiment generated through Insider Monkey’s database of 924 hedge funds that filed 13Fs for the Q4 2021 period.
8 Mining Stocks to Buy Today According to Kerr Neilson’s Platinum Asset Management
8. Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR)
Platinum Asset Management’s Stake Value: $86,000
Percentage of Platinum Asset Management’s 13F Portfolio: <0.1%
Number of Hedge Fund Holders: 26
Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR) is a mining company that focuses on hydrocarbon exploration. It was founded in 1953 and is headquartered in Rio de Janeiro, Brazil. The firm explores, develops, and produces crude oil, natural gas liquids, and natural gas. It mines crude oil from both on and offshore sites, alongside shale and other rocks.
For its fiscal fourth quarter, Petróleo Brasileiro S.A. – Petrobras reported $24 billion in revenue and $5.6 billion in net income, missing analyst revenue estimates. BofA downgraded the company’s stock to ‘Neutral’ in March 2022, stating that the Brazilian government’s efforts to regulate petroleum prices might not bode well for the company. However, it kept a $16.50 share price target on the company.
The political uncertainty surrounding the company came to the forefront in March 2022, when it was reported that Brazilian president Jair Bolsonaro was set to remove Petróleo Brasileiro S.A. – Petrobras’s chief executive officer Mr. Joaquim Silva e Luna. The news proved true in April 2022, when Mr. Silva e Luna was replaced by Jose Mauro Coelho, as the Brazilian president was unhappy about the rising petrol prices that he claimed were a “crime” against his citizens.
Platinum Asset Management held an $86,000 stake in Petróleo Brasileiro S.A. – Petrobras at the conclusion of the fourth quarter of last year, owning 7,866 shares. Insider Monkey’s survey of 924 hedge funds for the same time period revealed that 26 owned a stake in the company. Rajiv Jain’s GQG Partners is Petróleo Brasileiro S.A. – Petrobras’s largest investor, owning 187 million shares worth $2 billion.
Microsoft Corporation, Meta Platforms, Inc., and Alphabet Inc. are joined by Petróleo Brasileiro S.A. – Petrobras in the list of Platinum Asset Management’s list of hot stocks for 2022.
7. Coterra Energy Inc. (NYSE:CTRA)
Platinum Asset Management’s Stake Value: $147,000
Percentage of Platinum Asset Management’s 13F Portfolio: <0.1%
Number of Hedge Fund Holders: N/A
Coterra Energy Inc. (NYSE:CTRA) is an American oil and gas mining company. It is involved in the production of oil, natural gas, and natural gas liquids. The company operates several different mining sites, with hundreds of thousands of acres of dry gas. Additionally, it also has roughly three million barrels of proven oil equivalent reserves.
Mr. Neilson’s hedge fund held 7,742 Coterra Energy Inc. by the close of December 2021, worth $147,000 at that time. Coterra Energy Inc.’s largest investor is Jacob Mitchell’s Antipodes Partners, which owns 8.4 million shares worth $184 million.
Coterra Energy Inc. reported $2.23 billion in revenue and $0.83 in non-GAAP EPS for its fiscal fourth quarter, in a mixed bag of results that saw it beat analyst revenue estimates but miss them for EPS. Mizuho raised its price target on the company to $44 from $38 in April 2022, outlining that its increased natural gas price estimate in the wake of the ongoing conflict in Ukraine and the resulting impact on the demand for U.S natural gas will bode well for the company in the form of higher demand and higher prices.
Diamond Hill Capital mentioned the company in its fourth quarter 2021 investor letter. Here is what the fund said:
“Other bottom contributors included Coterra Energy. Coterra is the result of a merger-of-equals between our prior holding Cimarex Energy and Cabot Oil & Gas—the largest natural gas producer in the Northeast. The combined company has solid, low cost of production assets and a good balance sheet. During the quarter, share prices fell as concerns over additional waves of COVID-19 pressured oil and gas prices lower.”
6. Cleveland-Cliffs Inc. (NYSE:CLF)
Platinum Asset Management’s Stake Value: $2.8 million
Percentage of Platinum Asset Management’s 13F Portfolio: 0.07%
Number of Hedge Fund Holders: 36
Cleveland-Cliffs Inc. (NYSE:CLF) is a steel manufacturer headquartered in Cleveland, Ohio. It is a vertically integrated company, which also markets itself as the largest and oldest independent iron ore mining company in the U.S. Not only does the company boast being fully self sufficient in the production of raw materials for its manufacturing capabilities, but it also aims to shift to fully sustainable operations by 2030, in a massive commitment for a mining company.
Platinum Asset Management owned 129,562 Cleveland-Cliffs Inc. shares at the end of the fourth quarter of last year, enabling it to hold a $53 million stake in the company, which represented 1.49% of its 13F investment portfolio’s value. Ken Fisher’s Fisher Asset Management is Cleveland-Cliffs Inc.’s largest investor. It holds a $272 million stake that comes via 12 million shares.
Cleveland-Cliffs Inc.’s fiscal fourth quarter results show that it brought in $5.3 billion in revenue and $1.78 in non-GAAP EPS, which missed Wall Street estimates for both metrics. B. Riley increased its price target on the company to $46 from $37 in March 2022, outlining that a metallic shortage due to the Ukraine crisis will benefit the company.
Alongside Meta Platforms, Inc., Microsoft Corporation, and Alphabet Inc., Cleveland-Cliffs Inc. is a favorite Kerr Neilson stock.
5. SilverCrest Metals Inc. (NYSE:SILV)
Platinum Asset Management’s Stake Value: $22 million
Percentage of Platinum Asset Management’s 13F Portfolio: 0.61%
Number of Hedge Fund Holders: 12
SilverCrest Metals Inc. (NYSE:SILV) is a precious metals miner that is headquartered in Vancouver, Canada. The company is focused primarily on exploring and developing properties that can be used to mine gold and silver, which are two of the most valuable metals in the world. It has a mining site covering 1,401 hectares in Mexico.
For its fourth quarter of 2021 investment portfolio, Platinum Asset Management held a $22 million stake in SilverCrest Metals Inc.. This came in the form of 2.8 million shares and it represented 0.68% of the firm’s overall investments. Insider Monkey scanned the portfolios of 924 hedge funds for Q4 2021 and determined that 12 out of these had also bought the company’s shares.
By the end of its fiscal fourth quarter, SilverCrest Metals Inc. had reported -$0.16 in GAAP EPS for its latest fiscal year. This beat analyst estimates by $0.03, and during the same time the company also reported $176 million in cash and cash equivalents for the full fiscal year. Desjardins set a CAD$15.25 price target for the company in February 2022, outlining that its Mexico mine is on schedule and will start to generate cash flow in the second half of this year.
Eric Sprott’s Sprott Asset Management is SilverCrest Metals Inc.’s largest investor. It owns 7.4 million shares for a $58 million stake.
4. Iris Energy Limited (NASDAQ:IREN)
Platinum Asset Management’s Stake Value: $43 million
Percentage of Platinum Asset Management’s 13F Portfolio: 1.22%
Number of Hedge Fund Holders: 11
While traditional mining companies focused on extracting valuable resources from the ground, new age miners have focused their attention on the digital sphere. They are focused on ‘mining’ cryptocurrencies, which involves extracting value from the internet by powering financial transactions. One such company is Iris Energy Limited (NASDAQ:IREN), which is responsible for mining bitcoin, the world’s most popular cryptocurrency through sustainable means.
Iris Energy Limited raked in a net profit of $71.7 million and revenue of $20 million during its fiscal Q2, missing analyst revenue estimates. The company commissioned a new site in Canada in April 2022, which brought its hash rate to exceed 3.3 EH/s.
Mr. Neilson’s hedge fund had a Q4 2021 stake of $43 million in Iris Energy Limited. This came in the form of 2.7 million shares and it represented 1.22% of the firm’s investment portfolio. During the same time period, 11 of the 924 hedge funds poled by Insider Monkey had also invested in the company.
3. Freeport-McMoRan Inc. (NYSE:FCX)
Platinum Asset Management’s Stake Value: $53 million
Percentage of Platinum Asset Management’s 13F Portfolio: 1.49%
Number of Hedge Fund Holders: 66
Freeport-McMoRan Inc. (NYSE:FCX) is an American metals miner headquartered in Arizona. The company is involved in the production of gold, copper, silver, and other metals.
Platinum Asset Management held a $53 million stake in Freeport-McMoRan Inc. during the fourth quarter of last year via owning 1.2 million shares. Insider Monkey’s Q4 2021 survey of 924 hedge funds outlined that 66 had owned the company’s shares.
Freeport-McMoRan Inc. reported $6 billion in revenue and $0.96 in non-GAAP EPS for its fiscal Q4. This let it beat analyst EPS estimates only. Deutsche Bank raised the company’s price target to $50 from $42 in April 2022, sharing that an increase in copper prices will help the company.
Freeport-McMoRan Inc.’s largest investor is Ken Fisher’s Fisher Asset Management which owns 48 million shares worth $2 billion.
Horizon Kinetics LLC mentioned the company in its fourth quarter 2021 investor letter which outlined that:
Freeport-McMoRan will illustrate. It is the world’s third-largest copper producer, closely following Chile’s Codelco and Australia’s BHP Group. In 2014, even though Freeport sold more copper than the prior year, its revenues dropped by over 25%, and it went from $4.8 billion of operating earnings (a 22% margin) to a $(0.2) billion loss. The company’s capital expenditures peaked in 2014 at $3.86 billion and will be about $1.72 billion in 2021, meaning the company is spending 55% less now than it was seven years ago. In inflation-adjusted terms, it’s spending 61% less today than seven years ago…”
2. Barrick Gold Corporation (NYSE:GOLD)
Platinum Asset Management’s Stake Value: $135 million
Percentage of Platinum Asset Management’s 13F Portfolio: 3.77%
Number of Hedge Fund Holders: 46
Barrick Gold Corporation (NYSE:GOLD) is a gold mining company headquartered in Canada. The company has mining interests all over the globe from North and South America to Africa.
Barrick Gold Corporation’s fiscal fourth quarter saw it bring in $3.3 billion in revenue and $0.35 GAAP EPS. These beat Wall Street estimates for both metrics. The company’s price target was raised to $24 from $3 by Jefferies in March 2022, as part of a broader analyst optimism about the mining market.
Mr. Neilson’s hedge fund owned 7 million Barrick Gold Corporation shares during the fourth quarter of last year. This gave it a $135 million stake which represented 3.77% of its portfolio. During the same time period, 46 of the 924 hedge funds part of Insider Monkey’s survey had also invested in the company.
Jean-Marie Eveillard’s First Eagle Investment Management is Barrick Gold Corporation’s largest investor, holding a $510 million stake via 26 million shares.
ClearBridge Investments mentioned the company in its fourth quarter 2021 investor letter. Here is what the firm said:
“Also within the structural bucket, we have selectively added to our commodity exposure with the purchase of Barrick Gold (NYSE:GOLD). Canadian mining company Barrick Gold is a play on operating improvements. The company has aggressively delevered its balance sheet and reduced capex spending to a lower level more permanently, directing its healthy free cash flow to dividends and buybacks.”
1. The Mosaic Company (NYSE:MOS)
Platinum Asset Management’s Stake Value: $150 million
Percentage of Platinum Asset Management’s 13F Portfolio: 4.18%
Number of Hedge Fund Holders: 46
The Mosaic Company (NYSE:MOS) is an agricultural miner headquartered in Florida, United States. The company mines phosphate variants such as ammoniated phosphate, monoammonium phosphate, and diammonium phosphate. These are used in the agriculture industry.
Platinum Asset Management’s stake in The Mosaic Company was worth $150 million as the fourth quarter of last year came to an end. It came in the form of 3.8 million shares and represented 4.18% of the firm’s investment portfolio. Insider Monkey’s Q4 2021 survey of 924 hedge funds revealed that 46 had bought the company’s shares.
For its fiscal Q4, The Mosaic Company had managed to rake in $3.8 billion in revenue and $1.95 in non-GAAP EPS, for a weak set of results that saw it miss analyst estimates for both. Citi raised its price target to $74 from $49 in March 2022, outlining that fertilizer prices are trending upwards in the wake of the Russian invasion of Ukraine.
Eric W. Mandelblatt’s Soroban Capital Partners is The Mosaic Company’s largest investor through a $172 million stake that comes via 4.3 million shares.
Ariel Investments mentioned the company in its Q4 2021 investor letter. Here is what the fund said:
“We continue to believe recent aggressive fiscal and monetary policy will drive high levels of intransient (rather than transitory) inflation. Recent inflation numbers have exceeded our hawkish predictions. While we believed the Consumer Price Index might rise +4% in 2021, double the Fed target of +2%; it rose +7%, the highest level in forty years. Ariel Focus Fund has been well positioned for this environment as natural resource and material companies such as The Mosaic Company (MOS) which returned +72.15% for the year. This was one of our two largest holdings at year-end and have performed well very early into 2022.”
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This article is originally published at Insider Monkey.
