Srikanth Iyer Posco PKX-N HOLD Jul 09, 2012

This is a “Risk-On” security. If you look at the South Korean index, this is their bellwether cyclical stock in the SK benchmark. Widely owned institutionally and retail and there is a lot of money inflow/outflow into the stock. If you like steel, Buy South African’s Kumba Iron Ore (KIROY-N), which gives you a 9% yield.

Srikanth Iyer

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DON'T BUY

A steel company operating out of South Korea. One of the cheapest steel producers in the world. They are benefiting by all the infrastructure plays that are going on right now. The price has moved up very smartly so be a little cautious at these levels.

DON'T BUY

Has had a heck of a run, pretty well doublng over the last 24 months. One of the lowest cost producers of steel in the world. Well managed and very up to date on the technology for steel production. Starting to see some competition coming in. Watching closely with the possibility of lightening up his position.

BUY

Many believe it is the premier steel company in the world. Have been benefiting from the big demand in new ships. Korean auto companies are also doing very well. Produce a very high quality steel. Even the Chinese are buying from them because they want the high end steel. Stock is fairly cheap.

DON'T BUY

Not a buyer of steel stocks right now.

BUY

Very popular emerging market stock. High degree of vertical integration (cheap access to coal and iron ore). Had a great run due to Chinese demand.

COMMENT

Great case of a fantastic company where the time is not right. It is the best steel company globally. Highest returns, highest profits, great customer base, good expansion in both India and especially Indonesia. Doesn't own it because there is significant global overcapacity. If you can stomach medium-term volatility over the next year or 2 and you have a five-year time horizon, it will serve you very well.

DON'T BUY

Korean steel company. World-class facility. Stock is off 15% over the last year. This is a warrant on your view of what global economic growth is going to be, what Chinese industrial demand is going to be and, therefore, incredibly volatile. Looks cheap but the question is, are the earnings sustainable. Steel stocks are cyclicals and you buy them when they look dreadful and sell them when everything looks wonderful. At the moment they look okay, but sentiment is turning and you don’t want to be there at the moment.

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Srikanth Iyer Posco PKX-N HOLD Jul 09, 2012

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