BHP Billiton (BHP)

He looks at this as a mutual fund of large cap commodities. You could draw many analogies of the iron ore segment relative to the oversupply in the oil market. As it starts to normalize, you will see some upside. The ultimate upside for this company is that we are going to see highly reserved production trying to come back on line. Longer-term, if you are going to take a view and are prepared to have the cyclicality, this is something you might want to put in your portfolio and just put it away. Balance sheet is not bad. He likes it. As a 4-5 year hold, it is a Buy here.

Teck Resources (TCK.B-T) or BHP Billiton (BHP-N)? Both are a little overvalued and most analysts would rate them as a Hold. This is a global diversified mining company, where Teck is much more of a strong regional player in Canada. If you believe there is going to be a global upswing in mining and commodity prices, you would probably want Teck.

It is US listed. The commodity complex has been a tough one. It is driven by tepid world growth and inflation which we have not seen. There has been a bit of a rebound play over the last few months. Bottom fishers picked these things up for a trade. BHP-N does reasonably well, without a debt burden, but for now he would pass.

This was recently upgraded by Morgan Stanley as an outperform. A really well run company. It got bid up a lot in Europe until a couple of weeks before BREXIT. A lot of the mining companies were flying very high with a sentiment that Europe was a value play. Overall it is a fine company, and thinks it goes higher. Expects 10% upside in the next 6 months or so. With its oil exposure, diversified exposure and its global following, those are all positive.

A very large mining company. It bounced off the low and there was a huge run on these commodity products. Not sure that you want to buy it at these levels. If you feel strongly about commodities, he would wait for a pullback. Feels very uncomfortable owning iron ore, when looking at the dynamics of China.

(A Top Pick March 4/15. Down 40.42%.) Got stopped out. This is so big, that it is hard to analyse.

For a 2-3 year hold? Was one of the best mega mining companies globally, however made some missteps, particularly going into oil. Global miners have been under tremendous pressure for some time. Doesn’t think that is going to change. With a dividend of 10% plus, you are almost assured of a dividend cut. However, if you are willing to live with half of that, which is reasonable, you will be okay. In the short run it will go lower rather than higher.

One of the super majors in mining. They have a number of different commodities such as iron ore, coal and gold in certain cases. Over time they may have to cut their dividends. If you have a longer-term horizon, he thinks you will do very well with it.

53 million tons closed year-to-date and will be over 60 by the end of the year. 80 million closed in China expected next year. None of that can be good for steel and that can’t be good for this company. They will survive, but this is not something he would invest in right now.

Besides other problems, this has the additional problem of just being sued today for $5 billion by the Brazilian government over the dam that broke. Wait until commodity prices start going up.

(Top Pick Sep 5/14, Down 47.57%) He sold a while back. It has big exposure to oil and iron ore, so his clients don’t own it any more.

One of the world’s largest commodity related companies. The commodity markets are suffering from excess capacity. He does not know what is going to be able to move the needle. When China is growing above 10% the growth in metals is much higher than 10%, but when it slows then metals are less than 1% growth. He would be cautious in this sector today.

This and Rio Tinto (RIO-N) are on his radar screen, in part potentially for some of his dividend oriented funds. Draws a lot of its revenue and EBITDA from iron ore. Many question the philosophy of the company, i.e. building more capacity in an oversupplied market, in an attempt to bring on more low cost supply, and driving out higher cost producers. This has been a huge overhang on iron ore. They are the dominant producers. Thinks the dividend is pretty safe and they can finance it for the next couple of years at current spot prices.

Has a great dividend. One of the lowest cost producers in iron ore. Their cost of production is about $20, so they can bear some of the costs. This is also a large oil company. If you can see a recovery in China and iron ore gets up to a better level, this stock will benefit a great deal. You are getting a great dividend, 5.3%, to be at these levels.

(A Top Pick March 4/14. Down 22.5%.) For him it is all about, can they make money and can they pay their dividends and be a sustaining business going forward. They need to make $10 billion, and they can easily make about $25 billion this year. They have incredible flexibility in their CapX plans. This is defence on a currency basis and on a dividend. He is down about 10% when you take into account currency fluctuation.