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Strategies & Market Trends : Value Investing
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To: Mattyice who wrote (40697)12/20/2010 12:40:37 AM
From: Spekulatius1 Recommendation  Read Replies (2) of 78726
 
Matt, rather than shorting VALE, which owns large deposits of iron ore that count amongst the lowest cost sources in the world, I would rather short steel companies, in particular those that are expensive and don't have a moat, like Posco does. X looks to me like a perfect example that operates with relatively high costs, trades at 4X tangible book and has shown huge losses in 2009 and 2010. Apparently it is part of all the material indices and ETF and get lifted up no matter the fundamentals. Well that is at least as I see it.

Coal and iron ore are the ingredients to make steel. Control of Low cost resources of either one constitute a moat. High cost steel producers like X have no moat, but are valued as if they had one. Those are a better short if things turn down from here.
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