I've been looking to try and get copper exposure and industrial exposure to the Mexican economy. I stumbled upon Grupo Mexico $GMBXF or if you use IBKR you can buy peso shares $GMEXICOB.
This stock trades at almost a 50% valuation discount to its core holding which is Southern Copper, $SCCO on NYSE. Which has the lowest cost and highest reserves of copper in the world, and has planned to increase production 60% over the coming decade.
If you buy Grupo you essentially buy 89% of cash flows for half the price and get to own Mexico's biggest railway for free. I get that conglomerates should trade at some type of discount. But this seems insane. The ownership also seems very competent, and they pay out a lot of their free cash in buybacks and dividends. *EDIT Just to add Grupo owns 89% of southern copper shares, and 74% of Ferromex, Mexico's biggest railway. Just their southern copper shares alone are worth 70 billion, Grupo's market cap is around 43 billion.
Am I missing something? If you're even slightly bullish on copper from Indian and Southeast Asia economic growth. And green energy will be using alot of copper over the coming decade. Why is this not a bargain?
