Monday, March 22, 2010

Bookkeeping: Starting Massey Energy (MEE), Replacing BHP Billiton (BHP)

I am going to replace mining giant BHP Billiton (BHP) - one of our longest held holdings - with a much less diversified name, Massey Energy (MEE) now that the stock has finally come in.  This name was my preferred choice in the space after it's recent acquisition [Mar 17, 2010: Massey Energy Seeks to Double Metallurgical Coal sales with Purchase of Cumberland Resources] but instead I began a stake in Alpha Natural Resources (ANR) last week. I still feel like I am chasing the market by buying anything after such a run but with the stock tagging the 20 day moving average on this morning's (cough) selloff, let us make this change today.  I last owned Massey in September 2008, it's been a while.

I will begin with a 1.4% stake in the $49.80s.  I'd like to add in the $45s.  As I stated when I bought ANR, these type of stocks can fall 8% in any session they are out of favor, so you have to build positions incrementally as well as sell them in pieces along the way up.


BHP Billiton (BHP) was not a major position of late but has been a nice trading stock for us over the past year.   I am exiting the last 0.2% exposure - there is absolutely nothing wrong with the company, or the stock - I simply don't want to carry more than X number of positions in the "commodity" space.  And while BHP has a diversified portfolio of metals, I am trying to target coking coal and iron ore specifically with the recent price hikes.

(potential double top in chart?)

[Mar 8, 2010: BHP Billiton Pushes Through 55% Price Increase in Coaking Coal Prices, Quarterly Pricing - Iron Ore Also Potentially Set to Soar]

Long Massey Energy, Alpha Natural Resources in fund; no personal position


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