POT anyone?

[excerpt from our email exchange]

The POT decision was such an interesting dynamic between politics and
finance, it was quite surprising to see how it played out. Kudos to
Premier Brad Wall for standing up to Harper and giving him a rare beat
down. He convinced the Alberta premiers and energy execs that if
Harper approves Potash, then oil and gas companies would be next. He
made the very convincing case that while fertilizer may be a strategic
resource now, it will be an even more important strategic resource in
the future for food and energy security. And with the world's largest
mining company attempting the largest mining takeover, who can argue
with the experts?
Somehow, I think if BHP would NOT pull POT out of the Canpotex cartel,
then I think Harper may have approved the deal. But lots of moving
parts, hard to say.

So I have a new trade idea. Sell Telus and buy POT! BCE just
announced weak earnings based on bell mobility, Telus will be next.
POT is off 4% today and has actually been lagging MOO and the other Ag
names over the past few months. I think BHP's interest in POT only
confirms that fertilizer is going to be one of the world's next
strategic energy resource.

I think we have the implicit OK from Des;
Arash, what say you?
- Hide quoted text -



On Wed, Nov 3, 2010 at 8:25 PM, Desmond Lam wrote:
> The G&M said it all: Triumph of Politics Over Principle! Now do you think
> any less of Harper! I think the US elections yesterday sums it up. In
> times of economic hardship, keep the message simple.. I mean Ford was
> elected with a platform of stopping the "gravy train"! Sounds stupid
> really, but it worked.
> Alas we're off to NYC tomorrow to see some sights and do some running so I
> might be incognito for a while. If you guys can think of a good way to make
> some $$, by all means vote for Ford if you have to....er I mean do what you
> have to do.
> Cheers,
> Des
>
> On Wed, Nov 3, 2010 at 6:55 PM, Eddie wrote:
>>
>> Wow Harper kills deal! When did he become a soft liberal protectionist.
>> Alas no trade today. Telus did not reach my sell price.
>> Lucky for us we did not act on my political instincts.
>> I thought Smitherman would beat Ford!
>>
>> Sent from my iPhone
>> On Nov 2, 2010, at 10:07 PM, Desmond Lam wrote:
>>
>> If Harper plays politics, he would do the populist thing and block the
>> deal. This is a close call. I agree with selling Telus. If you have tine
>> tomorrow morning, try to make the trade. My bet is that BHP comes in with a
>> higher bid to make it "friendlier". You always invite the guy with the
>> extra booze into your party. Alternatively, we can pick up some POT through
>> MOO! I'm not sure the commodities have priced in how big QE2 is going to be
>> tomorrow. Lot's of news coming down the pipe. The base case scenario is
>> another cool $500 billion over the next 6-12 months. Anything less than
>> this and the $US strengthens and commodities may weaken. Anything larger
>> aka the bazooka, and the $US falls and gold and commodities as well as all
>> risk assets get repriced upwards! Interesting times. I notice the Greeks
>> are electing a new gov't too in a few weeks time and they're not happy with
>> their current Pap!
>> Des
>>
>> On Tue, Nov 2, 2010 at 3:55 PM, Arash Bateni
>> wrote:
>>>
>>> Honestly, I am reluctant to bet on Harper's decisions.
>>> I'd rather rely on my understanding of economics than politics ;)
>>>
>>> On Tue, Nov 2, 2010 at 12:06 PM, Eddie Kim wrote:
>>>>
>>>> sort of a last minute, short term trade, but shall we trade Telus for
>>>> POT? Although the market is somewhat unsure that Harper will nix the
>>>> deal, I am more than convinced the right-wing ideologue will never
>>>> interfere with free-market economies (whatever that means). It would
>>>> be so out of character for Harper to stand up for protectionism or
>>>> "canadian net-benefits", I am willing to put money on it. POT is at
>>>> $148 well above the BHP bid of $130, hence the market and most
>>>> analysts are predicting an increased bid of $165. It's only held back
>>>> by the possibility of political interference. which I claim will never
>>>> happen.
>>>> Telus is at $45.50, off it's highs of $47, but as I mentioned before,
>>>> like RCI, they are experiencing some competitive pressures from the
>>>> startups, so the easy money may have been made there.
>>>> This trade has to happen today since the gov't will announce it's
>>>> decision Wed morning.
>>>> Let me know
>>>>
>>>> Eddie