Bullish narrative: China figures out how to get out of their banking crisis and grow their economy again. H. Clinton gets elected, providing China with the extra capital they need, gathered by ripping us off, to stockpile more copper. Freeport continues to delever its balance sheet and lives happily ever after.
Or: Freeport is unable to make profits with copper hamstrung at low levels, due to China’s inability to grow. Trump gets elected and declares China a rogue state, which starts a sequence of events that causes Freeport to refinance its $18b debt load during bad, dilutive, conditions.
Copper drops off a mountain and the shares cascade into the mid single digits.
October is the month for wanton volatility. Courtesy of Exodus‘ seasonality engines, FCX has both enjoyed and endured double digit returns and deficits for the month of October in 8 out of the past 10 years.
I am biased. FCX has a giant hole to dig out of at a time when commodity prices are unsupportive and are headwinds for a company seeking to delever. This was one of my largest positions in 2015 and I sold it out to eventually pave the way to sell it short in 2016 –currently a 25% position of mine from $11.60.
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