Wednesday, April 16, 2008

Adding Nucor (NUE) & Selling Agriculture Strength

I made a few moves today. Towards the close I sold calls against some agricultural positions. Shorter term (next couple of trading sessions) I expect the agricultural stocks to come in a bit. I have been bullish on Mosaic for a 170% gain since October 3rd and have liked Terra (TRA) & Terra Nitrogen LP (TNH) for almost a year.

The infrastructure boom cannot be ignored. I am currently holding McDermott (MDR) and Vale (RIO). Today I added Nucor Steel (NUE) to the portfolio. I also considered US Steel (X), but felt that Nucor is better managed (higher operating margins and return on equity) and is also less expensive based on forward earnings estimates. US Steel is also a bit more volatile with a Beta over 2.50. Nucor reports earnings before the open tomorrow.

Monday, April 14, 2008

Energy, Ags, & Infrastucture

The only three areas that continue to work are energy, ags, and infrastructure. I see no compelling reason to own a financial. My current exposure to the financial sector is through Banco Bradesco (BBD). Wachovia's earnings miss today confirms that no bank is safe. Thornburg Mortgage (TMA) is virtually operating in bankruptcy. TMA's convertible debt offering had an exercise price of $0.01 per share.

The bottom line...

Stay long McDermott (MDR), Diamond Offshore (DO), Petrobras (PBR), Chesapeake Energy (CHK), Terra Industries (TRA) Monsanto (MON), & Mosaic (MOS).

Note: I am long MDR, DO, CHK, TRA, & MOS