Chris Kourtis, portfolio manager at Ellerston Capital, has switched out the fund’s holding in BHP for a stake in Andrew Forrest’s Fortescue (ASX:FMG).
“Following the sharp derating, we believe FMG now offers a compelling entry point at current bombed-out levels,” Mr Kourtis said to investors.
Earlier this year, Fortescue was the least-held of the ASX’s 10 largest companies by Australian fund managers.
The slew of buy ratings follows a 41 per cent decline in Fortescue shares since the start of the year, outpacing a retreat in iron ore peers BHP and Rio Tinto, which have fallen 21 per cent and 19 per cent respectively in 2024.
Mr Kourtis claimed the hopeless outlook was reflected in its already-weak share price.
“Negative sentiment around sluggish but flat Chinese steel demand, elevated China port inventory and an improving iron ore supply outlook from West Africa have weighed on the big three Australian iron ore producers,” he said.
“However, we believe the valuation buffer now accounts for much of the risk to spot prices moving below $US100 a tonne.”
Source: Financial Review.
