Freeport McMoran Copper & Gold (FCX)

With this you have to have a call on copper prices. Over the next year he thinks copper prices will essentially stay where they are. Previously this was a pure play copper company. Spun off some assets in the energy patch, but eventually bought back. He questions the way they went about buying and the capital they used and was it necessarily in the best interest of the shareholders. Also, this distracted them from their core business. Assets are okay. Stock is going to be a play on what is happening with the underlying commodity and he thinks copper doesn’t do any more than $4 a pound over the next year. Probably fine for a longer-term holder.

US mining company, mostly copper. If you buy this, you have to have a good, long-term expectation that copper is going to do very well. He doesn’t think copper is where you really want to be. Feels the commodity super cycle is finished.

Big base metal companies came off in the summer and he felt there was a spot where you could buy them. This company and BHP Billiton (BHP-N) were almost identical. He just happened to pick BHP because it was a diverse business. On this one you should easily get a 40% rate of return if things turn around.

Did like this one but there have been some big challenges in a few of their operations. Thinks there are other operations that are better, such as BHP Billiton (BHP-N) if you want to hold for longer period of time.

Likes this overall but unfortunately right now copper, although it has the best fundamentals of any of the base metals, there is still a fairly large amount of surplus. Too much inventory.

An outstanding, well run company and a better investment over the long haul than TCK.B-T. Copper is a big part of FCX and he does not know if they can continue to pay the dividend if copper prices go lower. He wasn’t crazy about their previous acquisitions.

Made some big moves into energy recently, which is disappointing to most institutional investors. In any case, it is still the biggest producer of copper with good exposure to gold. Not expensive. Not his preferred holding in copper anymore.

Their announcement in December of entry into the energy business kind of put investors into a sour mood. Stock hasn’t done so well. Has always been a pure play in the copper space and now we have to contend as to whether they are energy or copper and how this acquisition will affect them. Would prefer Teck Resources (TCK.B-T) which he has been buying.

Last year was a very bad year for them because 1) the whole commodity complex suffered quite a bit and 2) because of some labour disruptions in Asia at one of their major operations. Because of this, their earnings were quite poor. A pure commodity play and he would look for other ways to play a world expansion other than through a pure gold/copper operator. There are operational risks.

Basic materials sector is having some money rotate into it. It’s the beginning of a new year where there is optimism and hope that the economy is going to heat up a little bit and maybe commodity prices have a bit of a lift. At this point there is not enough evidence to make a big allocation. This company is in the process of going through a change in the investor base.

Just made a huge acquisition in energy. People were upset because they viewed this company as a metals play, not an energy play. Terrific world scale company. Not the one he would buy right now. Situation is a little clouded with the acquisition.

Major businesses are copper and gold. Producers have struggled compared to the commodity. A lot has to do with operating risk and we have seen a lot of these companies stumble. He would be light on this one.

Largest gold/copper mine in the world (Indonesia). Maybe their acquisition of Plains, putting them back in oil/gas, is a good move, but that’s not what investors want. Almost 4% dividend but will that be sustainable when they have spent $9 billion on acquisitions? You also should have some questions about the long-term strategic direction for the management. Suspects there will be a phenominal selling of the stock by people who wanted the purer play in gold/copper.Largest gold/copper mine in the world (Indonesia). Maybe their acquisition of Plains, putting them back in oil/gas, is a good move, but that’s not what investors want. Almost 4% dividend but will that be sustainable when they have spent $9 billion on acquisitions? You also should have some questions about the long-term strategic direction for the management. Suspects there will be a phenominal selling of the stock by people who wanted the purer play in gold/copper.

Just announced they are acquiring Plains and McMoran for $9 billion so are getting deep into oil now. Whenever a company like this dilutes their product offering or their focus, it can be very good or sometimes a challenge. Market is treating this as a challenge but he doesn’t know that he would jump to that conclusion. Well managed. Don’t expect they would get into an endeavour like this without having done thorough research.

[Show did not air however top and past picks were posted to web site] (Top Pick Nov 3/11, Down 2.41% total return)