NEW YORK (TheStreet) -- Is it time to jump back into diversified mining stocks? Probably yes, if you are a long-term investor.
That is the view of veteran mutual fund manager Joe Wickwire.
Wickwire, who among other responsibilities manages the $300 million Fidelity Global Commodity Stock Fund (FFGCX), and the $1.1 billion Fidelity Select Gold Portfolio (FSAGX), says that there are two broad reasons that now could be the time to jump. The first is that the end of the commodities boom, or supercycle, seems to have alerted mining company managers to the need to be selective in how they produce and allocate capital. Eventually, he says, that should lead to supply cuts and better stock returns.
The cycle, which petered out in 2012, "unfortunately gave firms an excuse not to be cost-conscious," he says. As a result, metals and mining firms overbuilt.
But that's all over now. BHP Billiton (BHP), Rio Tinto (RIO) and Anglo American (AAUKY), all large global companies, have now removed the key managers "who did a less-than-perfect job" during the super cycle, he adds, citing poor capital allocation decisions.
"The order of the day is to get the business right-sized," he says. Put another way, that means there'll be a smaller supply of metals and minerals hitting the world market in the medium term.
In case you forgot, lower supply when demand remains constant tends to mean higher prices.