Why Carl Icahn And Other Hedge Fund Titans Are Bullish On This Mining Company

Icahn revealed his investment in Freeport-McMoRan Inc (NYSE:FCX) at the end of August following reports that he was interested in buying as much as 25% of the company. Although the filing revealed that he could potentially seek board representation, there is no ambiguity in Icahn’s demand to reduce spending and executive compensation. The company’s management has stated its openness to dialog with shareholders in its bid to return to profitability amid falling commodity prices. For the three months ending June 30, 2015, Freeport-McMoRan posted revenues of $4.24 billion, 23% lower year-over-year, while net profit turned negative, with the company posting a loss of $0.09 per share. Analysts are upbeat about the prospects for the current quarter, expecting earnings of $0.05 per share derived from estimated revenues of $4.2 billion. The company has pledged to scale back operations at some of its mining facilities, trim its U.S workforce, and reduce next year’s capital spending to $4 billion from the previously estimated $5.6 billion.

Freeport-McMoRan Inc (NYSE:FCX) announced on Friday that it has raised approximately $1 billion from a previously-announced share sale. As a result, the company’s stock fell by 9.7% to $10.88, while so far this year shares are down by 53%. The company announced its intention to use the proceeds from the sale for debt repayment and capital spending. During the second quarter, the number of hedge funds invested in Freeport-McMoRan increased to 41 from 31, while the overall value of their holdings increased by 125% to more than $581 million. Hedge fund legend Stanley Druckenmiller joined the list of the company’s fans in the second quarter, initiating a position that amasses 3.54 million shares, while Ken Griffin boosted his stake in the company by 19% to 2.72 million shares. Mario Gabelli‘s GAMCO Investors holds a similar position of 2.73 million shares, up by 13% during the quarter.

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