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Should You Hold Lithium Americas Corp. (LAC)?

Massif Capital, an investment management company, released its “Massif Capital Real Assets Strategy” fourth-quarter 2023 investor letter. A copy of the same can be downloaded here. 2023 was a difficult year with a lot of volatility in both long and short books. Ultimately, the year concluded with a decrease in the short book and an increase in the long book (gross of fees) but not significantly. The fund returned 3.20% (net of fees) while the long position returned 5.69% and the short position returned (2.23%) during the fourth quarter. In addition, you can check the top 5 holdings of the strategy to know its best picks in 2023.

Massif Capital featured stocks like Lithium Americas Corp. (NYSE:LAC) in its Q4 2023 investor letter. Headquartered in Vancouver, Canada, Lithium Americas Corp. (NYSE:LAC) engages in the exploration and development of lithium properties. On February 26, 2024, Lithium Americas Corp. (NYSE:LAC) stock closed at $4.410 per share. One-month return of Lithium Americas Corp. (NYSE:LAC) was -2.43%, and YTD its shares lost 31.09% of their value. Lithium Americas Corp. (NYSE:LAC) has a market capitalization of $711.382 million.

Massif Capital stated the following regarding Lithium Americas Corp. (NYSE:LAC) in its fourth quarter 2023 investor letter:

"Currently, we remain, at a small size, invested in two lithium mining firms, Lithium Argentina (LAAC) and Lithium Americas Corp. (NYSE:LAC). Both companies were part of a single entity (Lithium America Original) as recently as October. That entity was a long-time Massif Capital Investment initiated in March 2020 at roughly $2.5 per share. At the time, the firm was in pre-production at two assets, an Argentina-based lithium brine deposit and a US-based clay deposit, to which we attributed little value because of the state of processing technology.

We used the stock's volatility to great advantage throughout 2020, 2021, and 2022 as we repeatedly sold both puts and calls on the company, reducing our entry cost below zero via premium earned on those options trading activities. In 2021, the stock peaked at roughly $39 a share, a roughly 1,460% gain on our purchase price. Given the state of the firm's assets, we should have cut the entire position instead of just trimming. We had confidence in the management team, and momentum and enthusiasm for all things EV and battery were strong, offering the potential for the market to run the price well past any reasonable value. Furthermore, at the time, the lithium prices we were seeing implied a fair value of the two development assets well north of $40 a share, and we were having trouble understanding how long the trend of sky-high prices would last….” (Click here to read the full text)

An aerial view of the vast Lihtium deposits in the Jujuy province of Argentina.

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Lithium Americas Corp. (NYSE:LAC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Lithium Americas Corp. (NYSE:LAC) was held by 9 hedge fund portfolios, compared to 9 in the previous quarter, according to our database.

We discussed Lithium Americas Corp. (NYSE:LAC) in another article and shared the list of $10 stocks that will triple. In addition, please check out our hedge fund investor letters Q4 2023 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.