Melbourne-based hedge fund L1 Capital, managing $8.7 billion in assets, is among those benefiting from the recent surge in lithium prices. This has allowed it to take on rival short sellers who have long targeted the sector. The fund’s significant stake in Mineral Resources (MinRes) has more than doubled in value this month, following Chinese battery giant CATL’s suspension of operations at a major mine. MinRes is a leading Australian mining services company with a world-class portfolio of mining operations. The company’s focus is on iron ore and lithium.
The suspension triggered a spike in the price of spodumene, the type of lithium mined in Australia. Prices rebounded from June lows to around 70 per cent, reaching $US975 a tonne, according to S&P Global Platts. In July, the L1 Long Short Fund, managed by Raphael Lamm and Mark Landau, rose 2.3 per cent, narrowly missing the ASX 200 Accumulation Index’s 2.4 per cent increase. Over the past three months, however, the fund has surged 15.7 per cent, nearly double the benchmark’s 8.2 per cent gain.
MinRes, a key holding for L1, saw its share price surge 33 per cent in July as lithium prices recovered due to supply cut speculation. This month, the stock is up 25 per cent. L1 has capitalised on these gains by reducing its stake in MinRes from 9.2 per cent to 7.8 per cent. L1 cited cost improvements at MinRes’ Wodgina lithium mine and progress on its Onslow iron ore project, which shipped 2.7 million tonnes in June, as drivers of the share price resurgence.
Other portfolio movements included gains in rail haulage group Aurizon, which rose 7 per cent after a positive trading update, and a decline in Canadian miner Hudbay Minerals due to weaker copper prices. Other funds such as Ausbil are also reporting positive results. Ausbil’s Long Short Fund gained 0.59 per cent in July, driven by contributions from companies like Life360, a family safety app provider. Life360 is a company focused on family safety, offering services that allow families to keep track of each other and stay connected.
