Icahn's Bet on Copper Miner Is Paying Off After Two-Year Wait

(Bloomberg) -- Carl Icahn’s investment in Freeport-McMoRan Inc. is finally looking up.

The Phoenix-based miner’s stock has surged more than 30 percent in the past month on the back of a historic rally in copper prices. The red metal is up for its 10th straight day and is on course for its longest winning streak since 1989.

Icahn's Bet on Copper Miner Is Paying Off After Two-Year Wait

Billionaire investor Icahn disclosed an 8.5 percent activist stake in stock and options in Freeport in the third quarter of 2015. He called for a review of the company’s “capital expenditures, executive compensation practices and capital structure,” as well as putting an end to “high-cost production operations.”

A filing at the time showed Icahn paid about $14 a share, spending about $1.23 billion. Freeport closed Wednesday at $18.69, putting the return on Icahn’s initial investment on par with the 35 percent return of the S&P 500 Index over the same period.

A representative for Icahn didn’t respond to requests for comment.

Icahn's Bet on Copper Miner Is Paying Off After Two-Year Wait

On the same day that Icahn disclosed his stake, Freeport announced that it would lower capital expenditures, curtail copper sales and cut production by 20 percent. Shares jumped 28 percent that day.

Freeport agreed to appoint two of Icahn’s representatives as directors in October 2015, after cutting the board from 16 to nine members. Shares surged as much as 14 percent on the news.

Icahn lowered his stake in 2016 and 2017 as copper prices stagnated and Freeport negotiated the sale of the giant Grasberg copper and gold mine in Indonesia to local parties. The transfer of control of Grasberg is expected to be finalized in the first quarter of 2018.

Since Icahn first bought shares in Freeport, proceeds from divesting oil and gas units have helped the company pay down some of its debt and cut its leverage ratio by more than half.

With copper’s rally, the value of Icahn’s remaining 5.3 percent stake has jumped by $369 million this month.

©2017 Bloomberg L.P.