If you own mining and energy stocks, you need to read this

A research note crossed my desk a few weeks ago that might change how you think about resource investing.

Massif Capital, a North Carolina-based fund, titled the report "You're Not Long Copper", which effectively says that investors who buy mining equities believing they have direct "commodity exposure" are largely fooling themselves. When you own a copper miner, you aren't really investing in copper, you're investing in a messy bundle of risks where the commodity itself is often the smallest driver of long-term returns.

Below, we unpack Massif's framework, look at what it reveals when applied to some of the world's largest resource companies, and explain why the results should make every resource investor question what they actually own.

Introducing the Commodity Purity Index

The Commodity Purity Index (CPI) is a framework Massif developed to measure, on a rolling basis, how much of a producer's equity returns are actually driven by the underlying commodity (versus everything else).

The scores run from 0 to 100. A score above 80 means the stock essentially behaves as a leveraged commodity instrument wrapped in equity form, while a score below 20 means that despite the company being labelled a copper miner or oil producer, the commodity barely moves the needle for day-to-day price action.

The model works by taking three rolling windows:

• 60 trading days of daily returns

• 120 trading days of daily returns

• 36 months of monthly data

Then regressing equity returns against three factors:

• A global equity variable

• The relevant commodity price

• The US dollar

• Plus a 'residual' bucket – price action the model can't explain, such as company-specific drivers like operational performance, capital allocation, cost control, exploration etc.

The output is a set of sensitivities for each factor, and the commodity sensitivity, which is effectively the CPI score.

There are a few other quirks to the process (dealing with multicollinearity, convexity, variance decomposition and return attribution – just some straightforward everyday terms we don't need to dive into).

But if there was one complex quirk that we should look at, it would be this.

The longer you hold, the less commodity-like it becomes

Equities become less commodity-like, the longer they're held (which is the exact opposite of what most investors assume).

Commodity prices are driven by a constant stream of fast-moving news. You've got a Chinese PMI print one day, a Fed decision the next, OPEC is meeting over the weekend, and so forth. Each piece of news moves the price, and more often than not, the next piece counters it. This creates high daily volatility but low autocorrelation (in laymans terms, today's move tells you little about tomorrow's).

Companies on the other hand, deal with a broad range of fundamentals like management quality, earnings, capital allocation and operational performance etc. When a company announces a major acquisition, the market doesn't fully reprice it overnight. The information trickles through earnings calls, analyst updates, and quarterly production data over months if not years (in other words, high autocorrelation).

The result is two very different signals, where the commodity factor is high-frequency and mean-reverting, while the residual is low-frequency, persistent, and slowly compounding.

As Massif puts it: Hold Lundin Mining for one day and it looks roughly 61% copper. Hold it for one year and it's about 21% copper. Hold it for five years and the figure is even lower.

Company examples and drivers

Let's dive into some company-specific examples. This is where it gets fascinating.

(OIL) ExxonMobil scored a 36-month CPI of just 20.1, which climbed to 57.3 at 60 days. This spread highlights how the equity behaves differently across various time horizons. Over the trailing 36 months, Exxon returned approximately 100%, of which oil contributed 5.5%, the dollar 14.5%, and the residual 110.4%. In other words, for anyone who held Exxon as an "oil play", the actual return came from corporate and operational factors that have nothing directly to do with the price of crude.

(Copper) Freeport-McMoRan records the highest 36-month CPI in the copper group at 20.9. Over this time, Freeport returned 46.7%, with copper contributing 45.2% and the global market 55.0% — but the residual was a brutal −45.0%. The catalyst dragging the residual down was the political risk associated with the company's Grasberg mine in Indonesia. The government took a majority (51.2%) stake in 2018, placing Freeport in a weaker negotiating position over export permits, smelter obligations, and the extension of its mining rights beyond 2031. A September 2025 mud rush at the Grasberg Block Cave killed seven workers and forced Freeport to declare force majeure, with a phased restart only now beginning.

(Copper) Lundin Mining's 36-month CPI of 16.0 sits in non-commodity territory which falls to just 3.2 at 60 days. Yet Lundin returned 160% over the period, with copper contributing 46.3% and the residual delivering an extraordinary 96.3%. The story here was driven by the Filo Mining acquisition re-rating and operational excellence across its Chilean and Brazilian operations. This is a clear case where the equity wildly outperformed what its commodity exposure alone would have delivered, almost entirely because of M&A and operational execution.

(Copper) Ivanhoe Mines is even more bewildering, with a non-commodity 36-month CPI of just 5.3. Over this time period, Ivanhoe returned 29.0%, but the residual was an abysmal −42.0%. In other words, the company-specific factors destroyed more value than the entire return itself. Unlike Freeport's modest residual drag, Ivanhoe faces a rather existential one, driven by a combination of the DRC's persistent sovereign discount and a major operational setback at its flagship Kamoa-Kakula complex.

(GOLD) Barrick Mining records a 36-month CPI of 36.2, making it the purest gold-factor play in the entire sample. Over 36 months Barrick returned 177%, with gold contributing an extraordinary 254.5% (yes, more than the entire return), while the global market subtracted 14.8% and the residual added 7.6%. Gold, and almost gold alone, drove Barrick.

(GOLD) Newmont, the world's largest gold producer, is the only stock in the entire sample to reach the "Strong" CPI band, scoring 71 on the 36-month measure. The commodity accounted for 48.1% of daily movement, while the US dollar accounts for 47.8%. Newmont is, in nearly equal measure, a gold bet and a dollar bet on any single day. Over 36 months, gold contributed 154.5% to Newmont's 107.5% total return, the residual subtracted 28.1%, and the global equity factor took off another 5.4%.

Simply put, Newmont fits the bill of a "leveraged commodity instrument wrapped in equity form." It provides greater gains when gold is trading higher, but also dampens its declines. This is exactly the payoff structure that mining investors seek, but rarely receive.

So what should you do?

Holding a massive portfolio of miners doesn’t diversify you away from the company-related drag, it just gives you more of it in average doses. Massif goes on to say that diversification does you a disservice, diluting any analytical edge you might have on the few names you actually understand.

What they recommend is to hold fewer positions (2-3 per commodity), do deep work on the company fundamentals (because that's what actually drives returns), and if you genuinely want commodity exposure, just buy the actual commodity.