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

Bought Fording Coal just as China and the whole global economy went through a huge swoon. Taking on that debt almost sunk the company. They got an injection of capital from the Chinese. Over time China resuscitated their economy with a huge stimulus package and coal, copper and zinc prices rose. Since then basically everything has been unwinding. Commodity companies can be extremely cyclical and fall much further than you anticipate.

(A Top Pick July 7/15. Up 27.16%.) (A Short) This was the type of stock that he likes to short. Had really bad price momentum and a levered balance sheet with not a lot of cash flow. Has started covering his position.

This has very, very strong seasonality. It tends to bottom around the middle to the end of October, and then tends to move higher. It doesn’t work all the time. This year the stock is starting to show early signs of support. This is probably reaching a very important low in the next 2-3 weeks, and that will be the opportunity to accumulate.

This is a commodity stock with copper and some gold content. This whole area is an “avoid” until we see the world economic numbers perking up. That could happen within a year or so, but right now we seem to be oversupplied with a lot of the commodities.

This company has had some very difficult times. If you own, he would hang onto the stock right here.

Copper will not stay down forever. Zinc is a hot product and in short supply. The real question mark is coal. He doesn’t see coal doing anything in the short term. If you own, be prepared to be patient.

This is one area that has been absolutely crushed. It looks like there could be a downside target of around $4. That doesn’t mean it is going to happen, but certainly the biggest thing that could change this is a change in the US$ which would sort of lift these up. We don’t have a supply issue as much as a pricing issue.

He still owns this, but has a very low exposure to it. It is suffering because metallurgical coal and copper prices are very depressed. Has a good balance sheet. He wouldn’t be surprised or upset if they eliminated the dividend to stay OK. This will be a survivor.

This has been the poster child for all those triple storm factors. Met coal pricing is at $84 a ton, a low that we haven’t seen in a long, long time. Copper is the depressed metal. They do have zinc, which is good. However, their 4^th leg is oil and nobody wants to own that. However, at these prices, the stock is quite attractive. They have done a good job of maintaining the balance sheet and its flexibility. When commodity prices are trading below cost for 50% of the industry, those companies will have to shut down. This one is not shutting down.

From an operating point of view, this is best in class in Canada. What they have done since the financial crisis until now, in terms of stability, has been fantastic. However, the commodity price environment has been detrimental. The one commodity that is doing well is zinc, but not enough to really lift the company out. Under $10 you really have to look at this.

Doesn’t like the mix yet. With China acting like it is, and if iron ore gets hit further, it could go down to $3 again.

The problem is that they have lots of debt, and are not making any money on these coal and copper prices. When you have a heavily indebted company that is not making money that is not a good combination. You are really making a call on coal and the copper markets.

Has owned this in the past. Doesn’t particularly like base metals yet, until we know how much slowdown we are going to have in the global economy. Because of that, he has been shunning base metals. He would want to see copper prices start to rebound and to break above the 200 day moving average. His company has this with a $14 target. There are better areas to be in. 3.3% dividend yield.

Sold his holdings because of the supply/demand fundamentals on met coal. There is still a lot of supply. You need a rise in demand from China and you need less supply. There are US coal companies that have gone bankrupt, but are still running full out because the banker needs the cash flow. The company also has big commitments to the Fort Hills oil sands project, to the tune of about $800 million a year for the next 3 years, and that is really draining cash out of the company.

(A Top Pick Aug 8/14. Down 51.43%.) The difficulty with this is like the difficulty in energy stocks. There has to be a base on the commodities, and then there has to be money directed into them.