BHP Billiton (BHP)

This is not a contrarian play. Believes the BV is about $25. Have over 2 billion shares outstanding. Pays a very nice dividend. He wonders that with the difficulties in the commodity sector if they might not have to cut the dividend.

Good operator. We are going to see a broadening out of emerging market demand for commodities. Indonesia and India are going to need iron ore and Brazil is going to require some. There will be more demand for copper and iron ore. Good balance sheet. Good hold for the long term. 3.6% dividend yield.

(Market Call Minute.) They are all trying to sell assets which they loaded up on at the height of the cycle.

Super cycle is over and this is a super cycle play. Iron ore prices are going to come down, which will hurt this company. Expects you are in for a slow period of growth for the next couple of years.

(Market call minute.) Good dividend yield. Trading very cheap at around 10X earnings. The key is the coal market but they’ve restructured and taken a lot of the costs out. Also, reduced CapX which is a good thing.

Only based metal stock they own, and this is a long term investment. Has the best balance sheet in the industry. Has a good yield. Main products are iron ore and copper. as well as shale assests. Have recently announced a cut in their capital expenditures, are building up cash waiting on other mining companies to be bought cheap.

Largest diversified resources company globally. Half iron ore as well as diversified mining material. The sector is quite challenged at the moment because of increasing costs and increasing supply along with a decreasing rate of demand growth globally. Very tough outlook for these businesses right now. If you wanted to own a mining company, this one would be a good way to go right now. He doesn’t have a single mining stock in his portfolio right now.

All the giant mining companies, and there are very few left, sort of got into a race to see who was going to be the biggest and were making acquisitions on a global basis, expanding their base. This one wanted to get into potash. Some of these acquisitions have not turned out so well. However, when you buy these companies, you are buying global giants with huge resources in the ground with huge capabilities of producing materials into the future. If you have a very long view, of at least 5 if not 10-15 years, it probably doesn’t matter what you pay for them as there is no substitute.

Longer-term, commodities tend to have a high correlation to inflation. Thinks longer-term there is a ton of inflation in the system. Strong balance sheet. Inexpensive by historical standards. Yield of 2.93%.

Large mining conglomerate with about $72 billion in revenues. Of that about $23 billion is iron ore and about $12 billion is petroleum. So basically over 50% of their revenues come from 2 major sectors. Trading at a cheap multiple and pays a nice dividend and will probably do well. Have a lot of capital expenditure coming up, which they have cut back on.

Believes there is substantial inflation and commodities are highly correlated with inflation. Best of breed operator. China will help them.

Good yield, good balance sheet and best of breed operator. Thinks there will be benefit from stimulus in China now that elections are over. Have energy assets. Long-term he likes it.

Far beyond gold company. Big commodity player. ECB has launched the big bazooka with QE3. It is tremendously bullish for gold and he thinks it goes higher, measured in years.

The problem that is being faced by any of these metal companies is that they have performed well over a number of years but over the last 18 months there have been lower lows and lower highs generally along with decelerating earnings and revenue lines. There are deteriorating fundamentals in Asia.