Liberum Stock Picker Loses Faith Hours Before $2.4 Billion Bid

Even the best stock pickers can get their calls wrong.

Liberum Capital Ltd. analyst Ben Davis is probably wishing he hadn’t pressed send on his Oct. 27 report downgrading KAZ Minerals Plc. He cut the copper miner to “hold” and lowered its target price to 470 pence -- indicating 19% downside from its last close.

Then Wednesday morning, the London-listed company’s biggest holder announced a 1.8 billion-pound ($2.4 billion) deal to take the company private, offering minority investors 640 pence per share. KAZ Minerals surged 9.7% as of 10:38 a.m., adding 262 million pounds of market value and putting it on track to close at the highest level since May 2019.

Refinitiv rated Davis as the No. 1 metals and mining stock picker in the U.K. and Ireland in its StarMine Analyst Awards last year, and he came in at a respectable No. 2 in this year’s rankings. When reached by phone after the deal announcement, he chalked the timing up to “terribly bad luck.”

Davis said he had concerns about the stock because of the investment needed for its $7 billion Baimskaya project in Russia. In his report this week, Davis wrote it’s “improbable” that KAZ Minerals will find a partner to help it develop the deposit, meaning the company is unlikely to see free cash flow until 2030.

Now it looks like investors will get a payday much sooner.

©2020 Bloomberg L.P.

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