L1 Long Short Fund posts 12.7% return as copper and AI drive Q2 gains
Investment manager L1 Capital highlights strong performance in its L1 Long Short Fund, driven by a significant position in Hudbay Minerals and broader artificial intelligence trends.
L1 Capital has released its second-quarter 2026 investor letter for the L1 Long Short Fund, reporting a 12.7 per cent return for the period. This performance significantly outpaced the ASX200AI benchmark, which returned 4.0 per cent. Year-to-date, the fund has delivered a 12.5 per cent return compared to 2.4 per cent for the benchmark index.
The investment firm identified the Iran conflict and developments in the artificial intelligence sector as the primary market themes during the June quarter. Market dynamics shifted following a ceasefire agreement that led to a decline in oil prices and a subsequent reversal in trends. Conversely, AI stocks surged due to strong earnings, rapid capital investment, and critical supply shortages, with US equities benefiting particularly from AI-related capital expenditure.
A key highlight for the fund was its position in Hudbay Minerals Inc (NYSE:HBM), which rose 15 per cent during the quarter. This gain coincided with a 9.7 per cent increase in copper prices. L1 Capital cited strong demand from the electrification, AI, and defence sectors as key drivers, noting that global supply remains constrained by weak production in Chile, mine disruptions in Indonesia and the Democratic Republic of Congo, and higher sulfuric acid costs linked to the Middle East conflict.
Hudbay Minerals, which closed at $20.36 per share on July 17, 2026, with a market capitalisation of $9.04 billion, completed an all-share acquisition of Arizona Sonoran during the quarter. The firm noted that post-transaction, Hudbay will own one of the largest growing copper districts in North America, describing it as a highly strategic asset base.
Despite the positive outlook, L1 Capital acknowledged that while Hudbay represents a potential investment, certain AI stocks offer greater upside potential with less downside risk. Institutional interest in the miner remains steady, with 42 hedge fund portfolios holding Hudbay Minerals at the end of the first quarter of 2026, an increase from 40 in the previous quarter.
