Yael Pipano

Teck and Fording Should Benefit from Rising Coking Coal Prices

Brian MacArthur is a very talented analyst that knows his coal companies (I've gotten his input and models on Fording when I worked for a billion dollar hedge fund 2 years ago). But even if you don't believe him, the coal shortage, floods and force majeures are true, and you can read about it in any Australian paper, and the demand outpacing supply is also transparent from recent articles. UBS raising their price forecast for coal and their price targets for both Teck and Fording was I'm sure after careful deliberation and calculation of all the pertinent issues at hand. I do agree, the extra profits will not show on either company's income statement for at least the next 2 quarters, but there's definitely a good risk/reward ratio to owning either or both companies at this time. In addition to being in the right business at the right time they are well managed companies with a long track record, and Elk Valley is something we should all be familiar with.