MICHAEL FARMER AND DAVID LILLEY KNOW A LOT ABOUT COPPER. They met when Farmer, 67, was running the largest copper trading firm in the world, Metallgesellschaft in Germany, and Lilley, 45, went to work for him in 1988. They talked about starting a hedge fund. In 2005, they launched RK Capital Management, which runs the Red Kite metals hedge funds in London and now has assets of about $1.3 billion. They named the fund after an endangered bird of prey and have found that the world supply of copper can become endangered too if enough people start hoarding it. Now Red Kite is taking legal action to stop BlackRock’s iShares and J.P. Morgan from holding supplies of copper. Those two financial institutions have no particular use for the metal — other than in the water pipes and electrical wiring in their buildings — but both have proposals with the Securities and...