Sherritt International Corp. (S.TO)

2017 bonds. It is primarily dependant on Madagascar. He has always been concerned about operations in Cuba, which closes them off to US, fixed income or capital markets. He is more comfortable in the bonds than in the equity and the dividend.

Suffering from tax loss selling right now. Business is well known and well understood and run by pretty talented people. You have to get technical and ignore the fundamentals. He would not recommend buying this until it starts to break out.

Lots of value. Not owned for a year or so. $3 means you are getting paid to wait, 4%+ dividend. Asset value of $10 to $11. Nickel is out of favour. Third nickel, oil and coal each. Could be broken up to realize value.

Has been hitting new lows, partially due to tax loss selling. The big problem was when they went into the Madagascar project. Politics there are a little bit turbulent. There are a number of environmental issues and the press has not been good to them. The project has reached the point where it looks like it is going to be producing some reasonable cash flow, however, metal markets are not nearly as good as they were when they started the project. Their coal and Cuban assets are still quite good. After all the tax loss selling is done, we may see the stock turn up.

Has not bought this, but some clients brought some in with their accounts. He has been focusing on other players in the mining sector. Their big project, Ambatovy, in Madagascar is almost a make or break project for them. There have been a bit of cost escalations there along with some delays. On a price basis, the stock looks very, very cheap. There are other, more diversified plays that he would prefer. (See Top Picks.)

Normally you would think that a change in the nickel price would have impact on the stock. Nickel has very strong seasonality from around this time of year through until May of each year. However, the stock is not following that pattern. Chart shows the trend is still on the downside and, as yet, still hasn’t shown signs of bottoming. Significantly below its 20 day moving average.

(Top Pick Nov 16/12, Down 25.74%) It is a sum of the parts story. It is the Madagascar project and people are looking at the nickel price. If it stays down a long time a lot of their competitors will shut down. Over 5% dividend. He would like the company to buy back stock.

Liability with the spill in Alberta is not yet known. Nickel prices are affecting the stock right now. Madagascar ramp up is not going as expected and that is what people are concentrating on. Dead money but with the 5% dividend.

This one always comes down to what you think will happen in the nickel market. There are a few people getting a little more positive on nickel recently in terms of a capital spending basis and in terms of supply and demand. Nickel has been under pressure for a number of years. If you are positive on nickel, this is the more direct play. On a seasonal basis, this would be the time to Buy.

Tarnished with the materials brush. In the last year the materials sector, mining and gold, have been a rough place to be. Buyers were positioning themselves for growth that was coming down the road and that growth was postponed. China was slower than people thought, but really North America did not pick up and get going. We are running about 2%, which normally would be at about 2.5% or a bit higher. At some point we will get a recovery with some traction, and then the materials stocks will start to perform. If you own and can be patient a little bit longer, a couple of more months, and if things aren’t happening by this spring you’ve got to really take another good look at this. We are into some strong seasonal strength in the market here.

Has done a lot of work on this for the last 12 months and he believes the yield is safe. Basically the oil side of the business and royalties on the coal side are paying the dividends. Nickel operations in Cuba are very efficient and they are expanding those. Question mark is the Madagascar mine that is coming on stream. Those are running at about 50% now and really have to get over 70% to know if it is working. This is a long-term call on nickel prices. Nickel prices are basically determined by demand from China where the economy has slowed. A longer-term call.

(Top Pick Nov 5/12, Down 25.03%) He just can’t find a floor for nickel. Loves the company and the people but Nickel has gone down so much.

A tough one. Terrible stock for a while. You are trying to catch a falling knife. You want to see a period of it stopping making lower lows. He can`t like the stock while you are looking for a bottom. Not a fan of coal for the next couple of years.

We are in the period of seasonal strength for materials. November 19 is the average start date. The average gains from November all the way through to May gets up to a whopping 20%. However, looking at the technicals, this shows lower lows and lower highs and there is no indication of a base yet. Everything is negative. The trend is negative and the 50 and 20 day are pointing lower.

Looked at it 3-4 weeks ago. He cannot get past the debt levels. That is the major problem with the company. Otherwise it is intriguing as a contrarian investment. Tremendous upside if they turn it around.