BHP Billiton (BHP)

The whole mining sector has rolled over, and as a value investor, he likes to buy commodities when they are cheap. They could get a little cheaper, but there are some structural stories here. One is that some non-core assets are being spun out. Its balance sheet will enable it to take advantage of some of the weaker players, particularly in the iron ore/copper plays. Also, have some energy exposure. Likes the rising dividend yield. Dividend yield of 5.23%.

Balance sheet is good and it is a dividend growth profile story. They were the 1^st to rebalance their portfolio. They are obviously trying to deal with the slow demand of the Chinese. They are going to ramp up iron ore production and use their high balance sheet to drive the high cost producers out of the market and ultimately lead to more consolidation. They will then start to pick up some of the weaker players. There could be some near term downside. Yield of 4.33%.

Bought in the financial crisis and then sold it this year. When commodities trend up or down they can really, really do so.

Iron ore broke down. BHPs cost of production is much lower than others and so it can do alright at these levels. They cut back cap-x and sold off some non-core businesses. The stock fell because people expected them to increase the dividend and buy back shares more aggressively. They have expanded into oil and gas. Trades at 15 times and they have a nice dividend yield.

They are spinning out some assets. Shareholders will probably get them as a dividend. He likes what will be left in it and he will sell the spin out and keep the core company.

BHP Billiton (BHP-N) or Teck Resources (TCK.B-T) for a long-term dividend/value investor? These trade on similar multiples. He likes this because it is a much larger conglomerate on the mining side. Although their big resource in iron is tied to China, they have other resources. With mining and China slowing down, they were able to sell off poor assets. Have Capital expenditures. This would be his preference.

If he didn’t have much in international, this would not be the name that he would be looking at right now. Iron ore is very dependent on the demand for steel. With the slowdown in construction, and housing in particular, and China, he expects it to continue. He would avoid any of the iron ore companies.

Thinks he can get a 15-20% rate of return plus currency gain.

An Australian mining company. Likes this because it is diverse, has a great balance sheet and has very good exposure to iron ore, which is one of the better commodities.

(A Top Pick Jan 23/13. Down 14.63%.) The story was primarily that China was going to take everything but that has changed. The big commodity plays have figured that out so they are obviously now developing the Indonesia’s, India’s, Brazil’s markets because those countries are going to need copper in order to develop their economies. An added benefit is that they have the energy assets. Their new CEO has energy and commodities. Good balance sheet. Likes it long-term. Just buy it and put it away and you’ll be fine.

Even without Canadian $ advantage this one should do well. It looks like it is coming off here. Hoped we would not have to own something as big and boring as this one.

Very diverse. Big in Iron ore, potash, copper. He is starting to warm up to a little more. It is more of a trade and a long term investment.

(Market Call Minute) Looking for Asia to do better next year.

(A Top Pick Dec 20/12. Down 11.29%.) Regards this one as the best-of-breed. Best of dividends and best balance sheet. This is the first one to move into different asset classes, so it has the potash and oil/gas assets. A diversified resource play. Expects volatility but longer-term it is a play on commodities. Likes this long-term.

The only mining stock he owns. Iron ore and oil. The only one he owns.