Grupo Mexico (GMEXICOB- MX or GMBXF). I just bought a position at 50.77 on Thursday on the dip. It doesn't have a ton of leverage, but it's a safe way to play copper to add to my more leveraged copper producing holdings.
(This is definitely not a junior miner so feel free to delete this if need be.)
Grupo owns 88.9% of Southern Copper, a top 5 global producer of copper. While you can own a piece of Southern Copper (SCCO), Grupo Mexico gives you an opportunity to own Southern Copper in addition to other assets like Asarco (a high cost US copper producer) and Grupo's rail business (which I think is the 2nd largest rail company in Mexico.
By my calculation, Grupo Mexico has a market cap of $21.99 billion (USD). When adding in the net debt of Grupo (excluding the SCCO debt that is consolidated) of $770 million, Enterprise Value is $22.76 billion. Grupo's 88.9% share of Southern Copper market cap is worth $23.8 billion. Therefore, you are actually getting paid to own arguably the best rail franchise in Mexico (with a growing presence in the US) and a high cost copper producer in the US.
I think there are a couple of things that is causing Grupo to trade at a discount to it's holding SCCO: 1) As I mentioned, Grupo owns Asarco, which is a high cost player in the copper world (cash cost of $2+/lb). I visited a couple of the Asarco mines back in December. Honestly, they aren't great, but they do have some value. 2) I think all of the discussion about Trump building a wall has people worried about what is going to happen to the rail business. The rail business is responsible for the majority of imports of autos into the US from Mexico.
Southern Copper is arguably the most attractive copper company in the world (fastest growing, lowest cash costs in the industry, pretty good jurisdictions), so I think that Grupo is a great way to own SCCO. In addition there is often talk about the company splitting off the infrastructure business in order to realize value for shareholders (which is dominated by the 3rd richest man in Mexico). I've loved this story for a while, but I'm finally getting my chance to buy some.
Just trying to make a few bucks.
