Teck Resources Ltd. (B) (TECK.B.TO)

Everything that this company holds is a death wish. There is a very large commodity cycle of about 33 years in length. We peaked out in 2011. There should roughly be 10-15 years of downside on the commodity side in general. We are only just getting started on the downside of commodities. Doesn’t see any upside to owning commodities beyond the odd countertrend rally. He wouldn’t want to have any exposure to commodities for quite some time.

Don’t average down. It is a good business but unpredictable in terms of the prices of the commodities they mine. They have all been under a lot of pressure. Until we get more certainty over demand levels out of China, don’t buy more.

(A Top Pick July 4/14. Down 60.99%.) Totally exposed to commodity prices. The difference between now and 2008 is that the balance sheet is much better, their ability to respond is stronger and a wiser management team. They have done some amazing things to keep that balance sheet intact.

Has a good chance of doubling. Often with companies like this, they can return to form. This has done this in the past and has the potential to do it again. It’s on his Watch list. He can see a better than 20% return a year. The balance sheet is not good at this time and commodity prices do not work for it.

He is holding on simply because it has become so cheap. Coal may not turn for a while, but the company is enjoying the fruits of a good zinc market. Copper will turn as well. The biggest issue is the price of met coal, which is not going anywhere fast.

This is a resource stock and a well-managed company. They are in copper and coal which are both under a cloud. He wouldn’t add to positions.

It is not a good time to invest in it. He has not owned it for a number of years. Copper, Oil and Gas have been under a lot of pressure.

He likes this company, but is not willing to start buying just yet. He makes a big distinction between base metals and monetary metals. Global economy is slowing down, but he doesn’t know how bad it is going to be. Feels the market is overvalued in relation to economic reality. This will be one of the 1^st companies he goes to when it’s time to start buying.

He does not own resource companies. They are selling off prize assets.

Coal prices have been under pressure. So have copper and other materials. TCK.B-T has had a great deal of success in deleveraging their balance sheet. If you took spot prices, they would have 4 years of liquidity. It is a high risk, high reward kind of thing. If it works out this will be a big winner. Some day they may have to go to the debt market, for example if we see more pressure on commodity prices. Their debt rating was downgraded recently.

If you are a long term investor, then these are in a down trend. TCK.B-T has had that run over a couple of days. It is a huge gain in a short time. 50 and 200 day averages point lower. It normally bottoms into the month of November and then December is a great month to be holding it. December might be the most opportune time to buy for a short term trade.

It is trading lower than in 2008 when there was a real risk they would go out of business, which is not a risk now. Their balance sheet is relatively healthy. It’s a screaming bargain and may become a bigger screaming bargain so he would not own it yet. It will be a big tax loss selling stock.

SHORT. From a valuation point it is not cheap. He thinks it has lots of room to go further down. It is exposed to the wrong stuff at the wrong time.

Downgraded to junk status recently. Involved with Fort Hills, which is the big cap spend they have through to 2017. Debt is not a big concern. They are in the met coal-copper space, and neither looks enticing, especially met coal. M&A is on the back burner and they want to focus on getting Fort Hills across the line and manage their debt.

This needs a recovery in commodity prices. Metallurgical coal is a key product for them. Because of the Chinese situation, that continues to be weak. Copper is a critical product for them, and he thinks it is close to its lows, but doesn’t see a big improvement until 2017. The market is particularly concerned about the money they are putting into Fort Hills. Their balance sheet is a concern and they cut the dividend. Doesn’t think there will be a catalyst for this to improve for the next 12 months.