Methanex Corp (MX.TO)

Why correlated to oil? He owns it and was disappointed they decided to cut the dividend by 90% -- the first cut ever. It had been yielding 11% up to that, so the market was expecting some cut. It correlates to natural  gas an input, but its output is related to gasoline as methanol is an additive to the fuel. He thinks going forward, although this is a cyclical business they should be able to weather the recession as it has in the past. He expects juicy capital appreciation as it trades 0.8 times book value. They have idled high cost facilities. It produces 13% of the world's methanol. Not a dividend payer anymore, but good upside on capital.

He just bought it, because he wanted more value and cyclical names. It's cheap. They're the world's biggest producer of methanol wich is used in plastics. They're expanding capacity in a U.S. plant and should get financing for that plant. They buyback a lot of shares. Now is a pullback opportunity.

They produce a product that is loosely a substitute for gasoline. The issue is that they produce in foreign jurisdictions. He does not like to worry about the different demand characteristics compared to gasoline. He would not bother with it at these levels although it could be a trading vehicle. He prefers CNQ-T.