Arrakis Global
Global Thematic Fund Manager
Aluminum producers should benefit from higher prices after Iran's drone attack on a major aluminum plant in the United Arab Emirates. Alcoa is the biggest and most obvious buy, alongside Century Aluminum, Kaiser Aluminum and France's Constellium. x.comÂ
Copper is one of the clearest trades over the next three years because supply is worse than most realize while AI accelerates demand. Chile, about a quarter of global production, just hit a nine-year production low, and copper miners have held up far better than silver and gold. Deutsche Bank forecasts copper soaring 50% to $22,050 a ton. x.comÂ
Copper will follow the AI trade lower, making it a good catch-up short. x.comÂ
Alcoa stands to benefit from tighter aluminum supply after Aluminium Bahrain suspended 19% of its total production capacity, as reported by @DeItaone, a move that is also inflationary. x.comÂ
Copper, aluminum, Freeport-McMoRan and Rio Tinto can climb to their 2008 supercycle highs, 4-5x current levels, as AI data centers and aerospace infrastructure such as SpaceX drive a capex cycle rivaling the 2000s China buildout, a Hugh Hendry call from his George Gammon interview. Per Hendry, aluminum is mispriced: no one can earn a competitive return on a new North American smelter at spot, so prices must multiply to fund the capacity US supply-chain decoupling needs. Accumulate on breakouts. … Show more
Steel is in a strong bull market since the tariff-panic lows, driven by strong demand and a weakening US dollar. All metals are moving higher, though miners are hampered by higher oil prices. x.comÂ
Gold mining stocks are worth owning heavily because the sector is generating extraordinary profits at current metal prices. Per Tavi Costa, gold miners are doing more share buybacks than at any point in history, on a scale never seen before, as a direct result of that profitability. You can't own enough gold stocks in view of what is coming. x.comÂ
Alcoa is breaking out to a fresh 52-week high on heavy aluminum demand and a lack of supply. The breakout comes from a high rectangle, which per Bulkowski is the most reliable chart pattern for completing to target. The price target is 80. x.comÂ
Alcoa looks cheap against its earnings, at 10x trailing and about 9x next year's versus the roughly 13x aluminum producers usually get. Applying 13x to next year's $5.80 EPS implies fair value of about $66-84, leaving shares about 25% below the low end. This read rests only on reported earnings and estimates, not fundamental work. x.comÂ
Wheaton Precious Metals is UBS's clearest buy in a mining sell-off driven by the dollar and rates rather than fundamentals. Per UBS, gold, copper and mining stocks fell more than 20% as a stronger dollar and higher rate expectations overwhelmed the safe-haven bid. UBS also points to Wheaton's 70% volume growth path to 2030 and a 30% discount to its five-year EV/EBITDA. x.comÂ