In assessing the market for global commodities, Fidelity Portfolio Manager Matthew Moulis is taking a close look at the stocks of certain copper producers, as he believes the commodity has the most attractive supply-and-demand profile among all metals.
“I expect demand for copper to increase as the global economy invests in the U.S. power grid and its infrastructure, electric vehicles, and renewable sources of energy,” says Moulis, who in February was named portfolio manager of Fidelity® Global Commodity Stock Fund (FFGCX). “At the same time, adding copper supply is challenging because the lead time for projects can be more than a decade before initial production begins, capital costs are large, and many countries are reluctant to approve new projects because of concerns about water usage and tailings (residue waste) disposal.”
This favorable supply-and-demand dynamic is an example of what Moulis seeks when choosing commodities-related investments for the portfolio. He favors companies in commodity subindustries where he expects the balance between supply and demand to tighten, resulting in higher prices for those commodities − and potentially greater profits for the producers and higher stock prices.
Moulis prefers commodity producers with low-cost positions within a particular commodity subindustry, which he believes can drive the stock over time.
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For example, he cites Vancouver-based First Quantum Minerals (FQVLF) as an outsized fund holding at the end of August. More than 80% of the company’s revenue comes from copper mining production, according to Moulis.
“It’s one of only a few essentially pure-play copper producers,” he says. “The company has opportunities to grow production through projects in South America, including the potential restart of the Cobre mine in Panama, which was shut down in 2024 for political reasons. I believe that would be a significant catalyst for First Quantum.”
Another focused copper producer in the portfolio is Antofagasta (ANFGF), a London-based Chilean multinational company. “I like that Antofagasta has high family ownership, which helps align incentives with shareholders,” says Moulis. “In addition, the company has runway to expand production through brownfield expansion projects, which are simpler than greenfield projects.” He’s also taken a shine to Lundin Mining (LUNMF), a large copper producer based in Vancouver, noting its good track record of operational execution, strong cost control and room to grow production in a capital-efficient manner.
Beyond their company-specific strengths, Moulis sees each holding as a potential acquisition target for a larger, diversified metals producer – further justifying the fund’s outsized exposure to them.
“I believe major miners such as BHP Group (BHPLF), Glencore (GLCNF) and Rio Tinto (RTNTF) may be inclined to pay a premium to acquire independent companies with distinctive copper development portfolios,” he suggests.
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Matt Moulis is a research analyst and portfolio manager in the Equity division at Fidelity Investments.
In this role, Mr. Moulis is responsible for covering the transportation industry. Additionally, he manages Fidelity Select Transportation Portfolio and co-manages the industrials sleeve of the Fidelity and Fidelity Advisor Stock Selector Large Cap Value Fund.
Prior to assuming his current responsibilities, Mr. Moulis covered the education services, alcoholic beverages, and alternative energy industries.
Before joining Fidelity in 2007, Mr. Moulis was an analyst at the Analysis Group. In this capacity, Mr. Moulis was responsible for working with a team to complete economic analyses and research, primarily for litigation purposes. He has been in the financial industry since 2007.
Mr. Moulis earned his bachelor of arts degree in economics and history from Bates College and his master of business administration degree from Massachusetts Institute of Technology (MIT) Sloan School of Management.