Here’s Why Lithium Americas Corp. (LAC) Fell in Q2
Massif Capital, an investment management company, released its “Massif Capital Real Assets Strategy” second quarter 2024 investor letter. A copy of the same can be downloaded here. As of the end of the second quarter of 2024, the Massif Capital Real Assets Strategy had gained 9.4% net of fees, with year-to-date profits from both the long and short positions. For more information on the fund’s best picks in 2024, please check its top five holdings.
Massif Capital Real Assets Strategy highlighted stocks like Lithium Americas Corp. (NYSE:LAC) in its Q2 2024 investor letter. Lithium Americas Corp. (NYSE:LAC) engages in the exploration and development of lithium properties. The one-month return of Lithium Americas Corp. (NYSE:LAC) was 6.79%, and YTD its shares lost 55.78% of their value. On July 26, 2024, Lithium Americas Corp. (NYSE:LAC) stock closed at $2.83 per share with a market capitalization of $614.591 million.
Massif Capital Real Assets Strategy stated the following regarding Lithium Americas Corp. (NYSE:LAC) in its Q2 2024 investor letter:
Lithium Americas Corp. (NYSE:LAC): No Massif Capital letter would be complete without examining something that is not working or that we got wrong. Thus far this year, the clear winner is our expectation that lithium would make a rebound. Lithium prices have continued to sell off, with lithium hydroxide and carbonate in China down ~10% since the start of the year and the lithium mining sector, as measured by the Global X Lithium ETF, down 18%. The fund's two lithium investments, Lithium Americas Corp. (NYSE:LAC) and Lithium Argentina, are down 48% and 46%, respectively.
While the story with Lithium Americas, a development company focused on building an exceptionally large lithium asset in Nevada, is complicated, the story with Lithium Argentina is similar to the situation in Siemens Energy last year. The market tossed the baby out with the bath water. The firm's Cauchari asset in Argentina is a bottom-cost quartile brine asset that is fully built, went into operation last year and continues ramping to full commercial production on schedule. At a 10% discount rate and $12,000 per ton lithium in perpetuity, we still think the firm's 44% ownership stake in the mine is worth $6 a share, 82% above the current price. At $18,000 per ton, the mine is worth more than $15 a share to the company. The operating leverage to the lithium price is fantastic…” (Click here to read the full text)
An aerial view of the vast Lihtium deposits in the Jujuy province of Argentina.
Lithium Americas Corp. (NYSE:LAC) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 4 hedge fund portfolios held Lithium Americas Corp. (NYSE:LAC) at the end of the first quarter which was 9 in the previous quarter. The Caucharí project of Lithium Americas Corp. (NYSE:LAC) reached a significant production milestone in the first quarter of 2024 by producing 4,500 tons of lithium carbonate, marking a 20% increase compared to the fourth quarter of 2023.While we acknowledge the potential of Lithium Americas Corp. (NYSE:LAC) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.