Why this fund manager is buying BHP shares

BHP Group Ltd (ASX: BHP) shares are slipping today.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant are down 1.7% in early afternoon trade on Tuesday, changing hands for $47.94 apiece.

For some context, the ASX 200 is down 0.6% at this same time.

Despite today’s retrace, BHP shares remain up 19.1% since this time last year. And that doesn’t include the $1.71 a share in fully-franked dividends the miner paid out over the 12 months.

This sees the stock handily outpacing the 5.7% one-year returns posted by the benchmark index.

And looking ahead, the team at Airlie Funds Management expect more outperformance to come (courtesy of The Australian Financial Review).

Here’s why.

BHP shares in the sweet spot

BHP is a diversified miner. The majority of its revenue comes from iron ore, with its growing copper revenue coming in at number two.

As you’re likely aware, the iron ore price has defied consensus expectations that it would trade below US$100 per tonne this year and potentially fall to US$80 per tonne.

However, BHP shares are Airlie’s biggest portfolio holding. The fund manager expects that iron ore prices will remain above US$80 per tonne, forecasting “fresh cash windfalls” for the miner, topping what the market has priced in.

Then there’s copper. Amid ongoing growth in global EV sales and the world’s push towards electrification, copper prices have surged more than 39% over the past year, currently trading for US$12,967 per tonne. And copper prices are widely expected to keep pushing higher in 2026.

This has helped send shares in ‘pure play’ ASX copper stock Sandfire Resources Ltd (ASX: SFR) rocketing 91.6% over 12 months.

That’s well ahead of the 19.1% gains delivered by BHP shares or rival rising copper producer Rio Tinto Ltd (ASX: RIO), whose shares are up 22.5% over this period.

Commenting on that lagging performance, Airlie fund manager Emma Fisher said, “We believe the valuation opportunity for both diversified miners [Rio Tinto and BHP] comes as the market is unwilling to ‘pay up’ for the 50% to 60% of both businesses that currently comes from iron ore.”

BHP increases FY 2026 copper guidance

BHP reported its half-year results (H1 FY 2026) for the six months to 31 December this morning.

On the copper front, the miner reported steady copper production of 984,000 tonnes, with its achieved copper price up 32% year on year to US$5.28 per pound. And BHP shares could get support with the miner upgrading its full-year FY 2026 copper guidance to 1.90 million tonnes to 2 million tonnes. That’s up from prior guidance of 1.80 million to 2 million tonnes.

“We have increased FY26 group copper production guidance off the back of stronger delivery across our assets,” BHP CEO Mike Henry said.

BHP shares increasing copper exposure

Commenting on the half-year results that have as yet failed to lift BHP shares today, Zavier Wong, market analyst at eToro, said:

BHP’s half-year update showed steady execution across iron ore and coal, providing a solid base for the business. It’s no surprise, though, that copper is the headline investors are focused on.

Wong noted, “BHP lifting copper production guidance highlights just how strategically important the metal has become, both for the company and the global economy.”

He concluded:

BHP is clearly positioning copper as a long-term growth pillar, with a pathway towards 2 million tonnes of production in the 2030s. Over the past 12 months, we have seen just how critical copper has become for the world’s largest miners as they look to secure future supply.

The post Why this fund manager is buying BHP shares appeared first on The Motley Fool Australia.

More reading

• Should you buy DroneShield, Westpac, and BHP shares?
• BHP shares rise on solid half and copper upgrade
• BHP lifts copper guidance after record half-year output
• 5 things to watch on the ASX 200 on Tuesday
• BHP shares at 52-week high: Here’s why I’m not buying

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.