Adding to Alcoa Position for Secular Trends Portfolio (AA)
Posted on | October 2, 2008 Time: 5:26 pm |
In line with my knife-diving purchase of Potash Corp (POT) earlier today, I am doubling up on Alcoa Inc with another 2% buy (1000 shares). I ran a 10-year chart of Alcoa this moring, and with today’s 7% decline the stock is now at a decade low in terms of valuation and within 10% of the lowest prices of the decade:
There are certainly near-term negative catalysts; the auto industry is god-awful and global growth is certain to at least slow from the 4-5% estimates thrown out earlier this year. But the hedge fund conspiracy theories are getting old fast. There’s only so much hedge fund money out there folks, and to think it was all concentrated into basic materials and energy is just amateur-level thinking.
Alcoa has turned a profit even in the worst of times, and secular trends indicate more efforts to insert aluminum as the metal of choice in building, industrial, and auto applications. The rising dollar is at worst a net wash, and at best a driver of margin growth over sales losses in the form of currency translation.
Buying 1000 shares AA at $19.50
Ryan Barnes
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