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Elliott Management's Hyperion to Seek Billion-dollar Mining Assets as Metals Demand Grows
Feb. 26, 2024 01:55PM PST
This past week also saw billionaire investor Stanley Druckenmiller make headlines for dropping a portion of his tech stocks and buying stakes in gold miners like Barrick and Newmont.
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Bargain-hunting billionaire investment firms are chasing undervalued mining stocks.
Those who follow the commodities markets are well aware that prices for many of the world’s important metals are facing continued downward pressure from weak global macroeconomics and heightened geopolitical volatility. As a result, mining companies have seen their valuations sink as institutional investors turn toward less risky ventures.
However, with commodities demand forecast to surge as the green transition takes hold, there's plenty of optimism that tides are set to change, and big-name contrarians are beginning to position ahead of time.
Elliott sets sights on mining investments
Elliott Investment Management (US$65 billion in assets under management) is set to launch Hyperion, a new investment company, with a massive war chest and a mandate to acquire global mining assets on the cheap.
With former Newcrest Mining CEO Sandeep Biswas at the helm, Hyperion is on the hunt for underfinanced mines, whether via simple buyouts or equity positions, the Financial Times reported on February 22. The company plans to target assets worth at least US$1 billion.
Base metals, precious metals and commodities strategic for electric vehicle batteries and renewable energy infrastructure are reportedly on its shopping list — think lithium, nickel, cobalt and copper.
Lithium in particular has faced headwinds recently, but a recent study by S&P Global shows that by 2035 demand for lithium, nickel and cobalt will be 23 times higher than in 2021, while demand for copper will double.
Value investing trending in mining sector
Elliott Management is not the only monied private equity group to see the opportunity presented by the mining sector at the moment. Appian Capital and billionaire Stanley Druckenmiller are just a couple of other names in a broader trend taking shape in the lead-up to an expected upswing in global demand for mined metals.
Appian Capital has said it plans to invest as much as US$2 billion in Latin America’s mining industry.
“We believe there are many ways that investors can invest in critical minerals such as metals and mining that offer the best exposure and inflation protection,” the London-based private equity firms’s CEO Michael W. Scherb told BNAmericas in late 2023. “Mining is the first piece of the entire critical minerals supply chain and is protected from price increases because miners can pass those price increases down the supply chain.”
Investors have also likely seen fresh headlines about Stanley Druckenmiller ditching a portion of his tech stocks for gold stocks. In the fourth quarter of 2023, he reportedly shed holdings in Google’s Alphabet (NASDAQ:GOOGL), Alibaba Group (NYSE:BABA) and Amazon (NASDAQ:AMZN) in favor of Barrick Gold (TSX:ABX,NYSE:GOLD) and Newmont (TSX:NGT,NYSE:NEM), the world’s two largest gold producers. He also increased his exposure to Teck Resources (TSX:TECK.A,TSX:TECK.B,NYSE:TECK).
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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