Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Ditchdigger who wrote (60489)	3/8/2018 9:13:01 AM
From: E_K_S	Read Replies (3) \| Respond to of 78719

Sociedad Química y Minera de Chile S.A. (SQM) - Is it time to look at Basic Material Stocks for their hard asset value. FWIW, I did small Buys in BHP in 2015 at 20% lower levels and started a position in FCX around the same time but selling at/near my cost (after holding 24 months...Ug!) I must have taken SQM off my watch list but do have a pretty large exposure to Basic Material/Natural Resource stocks. These move in cycles based on the Global Demand growth (expanding economies). SQM was one of a few suppliers of lithium which is in huge demand from all the electric cars. It was very profitable at the time I reviewed it but has run up significantly in price since then. I decided it had too much specific company risk both being located Chilie (regional risk) and mining one main product. Two of my largest holdings are Basic Material stocks, BHP and Anglo American plc (NGLOY). These companies are huge world wide, pay a pretty good divided and will do well in an expanding economy. Iron Ore and Copper have been the two main drivers in the last cycle. Each had to cut their dividend in earlier years because of little to no growth and lower demand for their commodities. BHP announced yesterday the raise of their divided back to 65% of their previous level. Both BHP & NGLOY dividends yield close to 4% and are paid twice a year. My plan was to peel off 18% of NGLOY after they go xdiv this month and move those proceeds into my Ag basket. I will still have a large exposure in Energy stocks, pipeline and refiners all in my top 10. I need to further trim those positions and get my AG Basket into my top 10 as well as something from my Drug/Health Care sector. I will pass on SQM. The value proposition w/ these Basic Material companies is they provide a good hedge against inflation. They own hard assets in the ground which will rise in value if/when inflation increases back to it's long term mean value. FWIW, I did add Lumber & Timber assets in the form of Weyerhaeuser Company (WY) but it was not at a bargain price (ie PE). They recently acquired Plum Creek Timber and are now structured as a REIT so their 3.5% dividend is secure. I would add to that position if it fell 15% from the current price. Hope that helps EKS