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

Commodities they produce are not in a bull market. Economy is slowing, which doesn't bode well for copper or TECK's earnings power. Event-driven story. Can't rule prospect of Glencore sweetening the offer. If you own it, perhaps hold for that sweeter bid. If not, stay away.

Global mining. Operations diversified geographically. Coal business is not ESG-friendly. Glencore offered 20% premium. Company split is off the table. High-quality assets, so he expects another bid. Trading high. Lots of speculation. Watch from afar.

Hard to believe they couldn't get the support. They were shy by about 12%. Tempted by the Glencore deal. At the end of the day, he liked the rerating potential of the standalone rather than 24% of a much bigger company. Timelines are the hurdle. Perhaps people would like to see the sunset clause on dual shares accelerated. Divesting metallurgical coal might need to happen sooner so the rerating can start. His issue was that jumping the regulatory hoops would take so long, whereas a made-in-Canada solution would happen immediately. 

He hopes it wouldn't get into foreign hands. Think of opportunities lost with the Inco's and Falconbridge's of the world. It would be a shame to lose another champion again. TECK.B is in the driver's seat when it comes to attractiveness of the assets.

A really interesting situation, as different parties are competing for the assets. Teck's plan to spin off its coal business will have a massive cashflow payment to the remaining company. Some people who want those assets might want them before that. 

Teck shareholders want the cashflow from the coal business, but they don't want the visibility because the optics aren't favourable. In terms of maximizing value, shareholders want the assets spun out so they can capture top dollar. It is awkward, because the company would be retaining 90% of the coal cashflow, but not the coal assets. 

The vote next week will be a huge catalyst to tilt things either way.

The controlling family absolutely doesn't want to sell to Glencore, but they may not have a choice. Once you take the genie out of the bottle, it's difficult to put it back in. We have a lot of these dual-class share structures in Canada, where there's family control of the board and executive. 

Shareholders do have a voice here, and there are two competing proposals. One is to break apart the business, but Glencore thinks they have a better idea. A great story where there might be hidden value to be surfaced, and sometimes it takes an outsider or transformational change to unlock it. Investors are speaking up. Glencore has hinted they might sweeten the bid. 

The path of least resistance for the shares is likely higher from here, but we don't know how it's all going to shake out.

Stay fully invested but don't rush out to buy more. The separation of the coal division from the rest of its mining operations, especially copper, is important to further takeover offers besides the Glencore one. He noted that metallurgical coal is very different than regular coal.

He's long the name. Glencore is trying to take advantage and throw out lowball bids. The fact that they want the asset shows how desirable it is. The appetite is there for massive takeout deals.

TECK has nearly gone bankrupt twice--too risky. The situation is interesting for shareholders. He does like how a Canadian company, Teck, is standing up for itself.

Dual share structure. Family has voting control. In better shape than ever. $8B in cash, paying down debt, increasing dividend. Issue is upcoming vote to split company, which would make a takeover difficult, thereby keeping the two new companies Canadian. On a takeover, dividend would get rolled into the one from the acquiring company.

It's in an interesting space. Copper and gold remain attractive. The stock moves around, but always has a fantastic balance sheet. Shares have soared with the takeover news, but you can still buy this.

On his watchlist, part of his bull market game plan. Macro risks could still pull shares lower. There are few names that are more cyclical than copper. With the coal spinoff, TECK will be unencumbered by that legacy asset. The "new" TECK will be more focused on nickel, copper, and other metals. EVs provide growth prospects. Cleaner balance sheet than before.

Does not own shares in the company.
Lots of people wondering why company splitting out assets.
Highly cyclical company that looks for commodities.
Better to invest at bottom of market.

He doesn't know where it's going to go. Best Canadian play in the base metals sector. Collapsing the dual-class share structure will, generally, be helpful to the company. The cycle will run longer than people think. Inflation will fuel commodities' sustainable run to the upside.