Hudbay Minerals (HBM) rose 15% in Q2 on a 9.7% copper rally, the L1 Long Short Fund said. Supply constraints from Chile to the DRC and the Arizona Sonoran deal underpin the call. The stock is down 27%.
Hudbay Minerals shares rose 15% during the June quarter, riding a 9.7% gain in copper prices, the L1 Long Short Fund said in its second-quarter investor letter. The fund, which holds HBM as a long position, attributed the move to demand from electrification and AI data center buildout, plus defence spending.
Supply constraints amplified the price response. Chilean production is running below prior-year levels. Mine disruptions in Indonesia and the Democratic Republic of Congo removed material tonnage from the market. Higher sulfuric acid costs, tied to sulfur supply disruptions from the Middle East conflict, squeezed operating margins for producers that could not pass them through, the letter said.
Hudbay closed its all-share acquisition of Arizona Sonoran during the quarter. L1 had been a large shareholder in the target. The acquisition gave Hudbay control of the Copper World project, a large undeveloped deposit in Arizona. The fund called the asset base 'highly strategic'.
The combination of falling mine output and rising demand from grid modernisation and electric vehicles creates a setup that favours developers with shovel-ready projects, the fund said.
HBM shares have cooled sharply since the quarter ended. The stock closed at $20.36 on July 17, down 27% over the prior month. The 27% drop followed a 107% rally over the previous 52 weeks. Profit-taking after such a run is common. The broader market rotated away from commodity names after the Iran ceasefire lowered the geopolitical risk premium in oil and metals, traders said.
More hedge funds are holding Hudbay. Forty-two funds held the stock at the end of the first quarter, up from 40 three months earlier. L1's own fund returned 12.7% in the quarter, beating the ASX200AI's 4.0% benchmark. Year-to-date, the fund is up 12.5%.
AlphaScala's proprietary model rates HBM at 62 out of 100, a Moderate score. The stock trades well below its 52-week high, and the supply-demand setup for copper remains structurally tight. For more on the metal's macro drivers, see our commodities analysis. The HBM stock page tracks the company's latest price action and fundamentals.
Hudbay is now one of the few pure-play copper developers with a permitted, large-scale project in the United States. 'Continued global supply tightness in copper underpins our positive medium-term sector outlook,' the fund wrote.
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