Will London clear up the pipeline for metals stocks?

By James Dennin for Kapitall.

The London Metals Exchange (LME) oversees more than 700 warehouses to make sure the pipeline that takes metals from miners, to distributors, to manufacturers—stays clear. 

The wait-time on aluminum has grown from 15 months to almost two years over the last 12 months, prompting some lawmakers to call for reforms. The LME issued a ruling that would require storage facilities with the longest waits to release more metal than they receive. 

That new rule would lower wait-times on the metal, helping keep prices low. Aluminum prices in particular have been rising as car manufacturers switch away from heavier metals like steel. 

Growing prices have beer manufacturers in particular concerned. Some estimates tally the additional cost of scarce aluminum to these companies at $6 billion. Reforms at the LME would certainly help the situation, although they would take time to have a measurable effect. 

With that in mind, we decided to screen metals stocks for promising names. To do that we looked for stocks in basic materials: industrial metals, silver, copper, gold, and aluminum. We then ran a screen on those stocks for companies with spikes in institutional purchasing from groups like hedge funds. 

Since the managers of these funds are professional investors, they often have access to better information than retail investors. We found 6 metals companies that had spikes in purchasing.

Do you think these firms are right to be bullish on metal? Use the list below to begin your analysis and let us know what you think in the comments. 

Click on the interactive chart to view data over time. 

 

 

1. Alcoa, Inc. ( AA): Engages in the production and management of aluminum, fabricated aluminum, and alumina. Market cap at $19.48B, most recent closing price at $16.56.  

Net institutional purchases in the current quarter at 73.6M shares, which represents about 6.29% of the company's float of 1.17B shares. 

Major Holder: Vanguard Group, Inc. (The) at a 6.34% stake. 

 

 

2. Southern Copper Corp. ( SCCO): Engages in mining, smelting, and refining mineral properties in Peru, Mexico, and Chile. Market cap at $27.7B, most recent closing price at $33.23.  

Net institutional purchases in the current quarter at 8.6M shares, which represents about 5.62% of the company's float of 152.99M shares. 

Major Holder: BlackRock Group Limited at a 1.41% stake

 

 

3. Thompson Creek Metals Company Inc. ( TC): Engages in mining, milling, processing, and marketing molybdenum products in the United States and Canada. Market cap at $484.29M, most recent closing price at $2.80.  

Net institutional purchases in the current quarter at 11.6M shares, which represents about 8.31% of the company's float of 139.64M share.

Major Holder: Letko, Brosseau & Associates Inc. at a 8.62% stake. 

 

 

4. UR-Energy Inc. ( URG): Engages in the identification, acquisition, evaluation, exploration, and development of uranium mineral properties. Market cap at $152.2M, most recent closing price at $1.18.  

Net institutional purchases in the current quarter at 13.4M shares, which represents about 11.59% of the company's float of 115.60M shares. 

Major Holder: Global X Management Company LLC at a 6.70% stake. 

 

 

5. Uranium Resources, Inc. ( URRE): Engages in the acquisition, exploration, development, and mining of uranium properties, using the in situ recovery or solution mining process. Market cap at $62.29M, most recent closing price at $2.53.  

Net institutional purchases in the current quarter at 2.5M shares, which represents about 13.53% of the company's float of 18.48M shares. 

Major Holder: RCF Management LLC at a 27.01% stake

 

 

6. Silver Standard Resources Inc. ( SSRI): Engages in the exploration, development, and production of mineral resource properties in Argentina, Australia, Canada, Chile, Mexico, Peru, and the United States. Market cap at $753.21M, most recent closing price at $9.26.  

Net institutional purchases in the current quarter at 6.7M shares, which represents about 8.32% of the company's float of 80.52M shares. 

Major Holder: Van Eck Associates Corporation at a 15.13% stake. 

 

(List compiled by James Dennin. Monthly returns sourced from Zacks Investment Research, institutional data sourced from Fidelity, all other data sourced from Finviz.)

Kapitall Wire is a division of New Kapitall Holdings, LLC. Kapitall Generation, LLC is a wholly owned subsidiary of New Kapitall Holdings, LLC. Kapitall Wire offers free investing ideas, intended for educational information purposes only. It should not be construed as an offer to buy or sell securities, or any other product or service provided by New Kapitall Holdings, LLC, and its affiliate companies.

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