Is Hudbay Minerals Inc. (HBM) the Best Zinc Stock to Buy According to Hedge Funds?

Hudbay Minerals Inc. (HBM) has been making waves in the mining sector, with hedge funds taking notice of its potential. But is HBM the best zinc stock to buy according to these savvy investors? Let's dive into the data and expert opinions to find out.

Hedge Fund Insider Buying

One of the most compelling reasons to consider HBM is the insider buying activity. Over the past three months, HBM insiders have bought more shares than they have sold. This suggests that insiders have a positive outlook on the company's future prospects and are willing to put their money where their mouth is.

Analyst Coverage and Consensus

HBM is covered by 31 analysts, with 12 of them submitting estimates of revenue or earnings used as inputs to the report. This high level of analyst coverage indicates that HBM is closely followed and may attract investors who rely on analyst research and recommendations.

Diversified Metal Portfolio

Hudbay is not solely a zinc producer but also produces copper, gold, and silver. This diversification can provide hedge funds with exposure to multiple metals, reducing the risk associated with relying on a single commodity. In addition, HBM's flagship project, the Constancia mine located in Cusco, Peru, is a significant source of revenue and growth potential.

Strong Exploration Results and Operational Efficiency

HBM has consistently reported positive exploration results, with recent highlights including surpassing one million ounces of gold production at its Lalor mine. Additionally, the company has been focusing on optimizing its production processes to reduce costs and improve efficiency. In Q3 2024, HBM reported record gold production in Manitoba, with 2024 production guidance reaffirmed and cost guidance further improved.



Financial Performance and Valuation

HBM's financial performance has been strong, with revenue increasing by 19.60% and earnings by 15.51% in 2024 compared to the previous year. However, HBM's P/E ratio of 35.10 (as of 2025/03/02) is relatively high compared to other zinc stocks, suggesting that the market may not fully appreciate the company's potential.

Risk-Adjusted Performance

To evaluate HBM's risk-adjusted performance, we can look at various metrics such as the Sharpe ratio, Sortino ratio, Omega ratio, Calmar ratio, and Martin ratio. These ratios help investors understand how much return they can expect for the level of risk they are taking on. While HBM's risk-adjusted performance ranks are not the highest, they are still within the average range, indicating that the company offers a reasonable balance between risk and reward.

Conclusion

Based on the data and expert opinions, HBM appears to be an attractive zinc stock for hedge funds. Its strong exploration results, diversified metal portfolio, and focus on operational efficiency make it a compelling choice. However, investors should also consider other factors, such as valuation and risk-adjusted performance, before making a decision. Ultimately, HBM's potential as the best zinc stock to buy according to hedge funds will depend on each investor's individual goals and risk tolerance.