Tuesday, June 23, 2009

Thanks Goldman for the BIDU $$$

I'll book this trade--the stock dropped over 25 points since Goldman upgraded it in just over 3 days!


Anonymous said...

nice move, still bull on X?


Anonymous said...

any idea what's going on with FIG? secondary at 5....dropped to 2.90 this morning and took an incredible beating yesterday.


Anonymous said...

On FIG - How many times do you want to be raped by Wes Edens?

Palmoni said...

X should be OK here-I covered my short calls on it today

X said...

Steel stocks have run a lot, but if current trends persist there is much more upside
1. Inventories are at 1997 levels. This, as service centers did not have the credit to maintain inventories.
2. Pricing is improving. China dumping has stabilized. Capacity has been taken offline. Signs of price increases now been put in, and sticking
3. Utilization at a low (50% or so) but improving. Signs of mill workers being called back. Any increase in utilization leads to margin expansion
4. Better balance sheets now. Names like Arcelor-Mittal have raised capital to improve their balance sheets
5. End demand will improve. Two key drivers: Auto demand improvement due to cash for clunkers, and property market appreciation in China, India and other emerging markets
6. Lower input costs. Coking coal and iron core costs are down 30+%.
7. The case for shorting steel is no more.

I prefer MT over X (scale). MT for instance trades at 6x 09 ev/ebitda. But better topline, better margins, lower capex, better FCF and thus lower debt, makes the 2010 picture much better. At 6x 2010 ebitda MT could be worth upto 50$. Thats 50% upside from here