Downside Protection - TECK
Teck Resources - TECK - $36 has been another poor performing stock this year (down -10%), but continues to one of my top ideas.
With the copper/gold ratio near an all-time low, now must be the time to own copper stocks. TECK has done a nice job of cleaning up their operations. By selling their met coal business, they now have no net debt, and are buying stock back at a fast pace. Chile can be a little bit of a political problem, but all seems calm. There is also labor peace with new 3-year deals in place. The Chilean mine is a tough place to work because of the altitude.
The even better news is that Rio Tinto, BHP, Anglo, and Glencore, all want to own more copper assets and Teck is just the right size for any of them. You seldom see a stock with four clear buyers if things go wrong. I strongly believe their is “downside protection” here. TECK will fight to stay independent, and they doing all the right things.
There are some tariff issues, especially in the zinc business which is about 20% of assets. Can I explain these issues, absolutely not. I still think I can own the stock.
Not many value investors have discovered copper stocks. Dodge & Cox is a TECK large owner, but I do not trust their work like I did 20 years ago. A few value guys own Freeport - FCX, but I am not a fan of Indonesia.
One of my favorite value investors, Don Smith & Co. owns a 1% position in my favorite copper stock, Hudbay Minerals - HBM - $8. This stock haas bounced from $6 to $8, but if ever gets back to $6 I might actually buy some myself. HBM has been doing everything right. They have an interesting property in Arizona that could become the largest copper mine in the US. They are also a gold producer.
Smith & Co has an interesting new position Harley-Davidson - HOG - $26. There are huge tariff issues and management fight going on. I think I prefer Brunswick and Thor, but I will take a peek.
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Best ideas:
Halliburton
Teck Resources
Matador Resources
to be continued