Q: I own a modest position in Hudbay Minerals (HBM). I was underwater on the stock but now I am up nearly 40 per cent with the recent run inculind today April 9. I have owned this one in the past and I have always sold it when it goes on a run and then I buy it back when it slides a few months later. Unfortunatley I did not add to my HBM position when it was badly beaten down in 2023. I don't want to add to this one but I am thinking of selling since that has served me well in the past. But this time I think it may be different since the "copper is the metal needed for the electrification of the world theme" might actually taking hold. HBM also produces a sizeable about of gold so I am not sure if that is driving the recent surge in the share price. What do the 5i guys think and would you buy, sell, or hold HBM without just shy of $11 per share?
5i Research Answer:
EPS at HBM is still lower than it was seven years ago, and it is not our favourite in the materials sector. It has a fairly leveraged balance sheet and has not created long term value (it was $29 in 2007). But copper and gold are acting well, and it has good positive momentum right now. Debt did increase last year, but cash flow fell slightly. We think it is 'ok' today for the sector, but we would prefer to own a pure play gold and silver company separately and would be more inclined to sell.