L1 Capital Long Short Fund released its Q3 2020 Investor Letter, a copy of which you can download here. The Fund posted a return of 8.8% for the quarter, underperforming the S&P 500 Index which returned 8.93% in the same quarter. You should check out L1 Capital Long Short Fund’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q3 2020 Investor Letter, L1 Capital Long Short Fund highlighted a few stocks and Teck Resources Ltd (NYSE:TECK) is one of them. Teck Resources Ltd (NYSE:TECK) is an integrated natural resource group with activities in mining, smelting, and refining. In the last one year, Teck Resources Ltd (NYSE:TECK) stock gained 27.3% and on January 7th it had a closing price of $19.85. Here is what L1 Capital Long Short Fund said:
“Teck Resources (TECK U.S. Long +34%) shares rallied strongly over the quarter driven by early signs of recovery in the coking coal market. Increasing seaborne demand from India and China (following a recovery in domestic steel production) drove an 18% increase in coking coal prices in September. Teck is one of the world’s highest quality mining companies with very low-cost operations in coking coal, copper and zinc. All of Teck’s main assets are situated in low risk jurisdictions, such as Canada, the U.S. and Chile. Teck is currently building one of the world’s largest copper mines (QB2) at a time when the world is gradually becoming short copper, due to ongoing grade declines at the world’s largest mines. Copper demand continues to enjoy secular growth due to rising living standards across Asia. We established a position in the company with the view that Teck was well placed to benefit from a recovery in copper and coking coal prices over the medium term, as spot prices were close to marginal cash cost for many mines and incremental supply has proven difficult to bring on in a timely manner. We have started to see early signs of this recovery and continue to believe Teck is exceptionally well placed to benefit from this going forward. Despite the strong performance over the quarter, we continue to believe Teck is materially undervalued. Even at today’s depressed commodity price assumptions, Teck trades on a P/E of only 9.2x FY21 (consensus earnings) and 4.7x EV/EBITDA, despite a large cost out program still to come over the next few years.”
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In Q1 2020, the number of bullish hedge fund positions on Teck Resources Ltd (NYSE:TECK) stock decreased by about 20% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in TECK’s growth potential. Our calculations showed that Teck Resources Ltd (NYSE:TECK) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
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Disclosure: None. This article is originally published at Insider Monkey.
