Why I'm Buying More Mechel

While still in a primary bear market, I just have to consider these commodity charts to be in their own bull market.While I'd prefer to buy around the 50 day moving average, in a bull market, you just have to be happy for a pullback to the 20 day, which is what we got Friday in Mechel (MTL). As opposed to buying some other names that are still nowhere near support at least we have a stock price near some support level here, so I am adding to one of my favorite names. The stock is down about 12% from peak way back.... Tuesday. I missed the exact top but cut back near $159 [Apr 22: Off with Some Mechel], so I'm getting back my position at 9% discount and away we go.

I'm adding in the $144-$145 range and moving Mechel up from 2.4% to 3.1% of the fund.

I began this company in early November 07 [Nov 5: Two New Foreign Positions Added Today], and frankly it's grown into one of my favorite ideas - much like the fertilizers and Apple (AAPL) I don't really keep up with the daily news on these, knowing it's going much higher over time - with the momentum trader bumps along the way. Unfortunately, Cramer discovered it as well but it still seems to be a relatively good secret (Yahoo message board volume is about 2% of fertilizer stocks or solar stocks for example) Talk about being in all the right places (steel, coal, iron) at all the right times with a totalitarian ...err, I mean friendly democratic... government at your back. Now if they only bought a Russian potash mine...

Some earlier posts...
[Dec 12: Mechel Reports Earnings, Considers Mining IPO] & [Apr 9: Mechel Continues to Acquire Most of Eastern Europe]

Disclosure: Long Mechel, Apple in fund; long Mechel in personal account

Comments

[WAKEUP]

Just curious: Was the Collaboration Agreement with VTB Bank a large part of your thinking, in this buying decision?

[Alpha Seeker]

Sell that sucker it is crossing the 20MA!!!.. just kidding, looks good Mark. For those of you who want to learn more check WallastonInvestments.c...

[sorrentocapital]

Mark, could you expound on MTL's Headwinds (why revenue and profits will continue to rise at rates that make the current price a discount), Tailwinds (the opposite) and any risks? I'd be interested in learning more.

I stumbled onto this company a week or so ago, based on some research into coking coal rates. I accidentally ran a pilot position up about $15, in a few days. I decided to take profit since I hadn't really done the appropriate amount of homework.

[TraderMark]

Wakeup: No, but it's just another feather in the cap.
Alpha Seeker: If I were doing short term trading I would of lopped off these shares as they immediately bounced nearly $10 within 1 session
Sorrentocapital: If you go to the blog and click on the Mechel tag I have many entries on this name, and you can go to the earlier ones to see the thesis. Actually I listed 2 of them in the story above. I do like it as a coking coal story, but also for iron ore and steel. And its proximity to China. And unlike our government who believes in "free markets" to eviscerate our entire manufacturing base, Russia protects its companies. Like it or don't like it. Just imagine if we had all our steel production in this current era. Instead we have a new dawn of steel, and about 3% of our capacity from the 1970s. So the rest of the world is benefiting and aside from a handful of companies like X we do not. Oh well. Free markets and all.