Commodity Play: Billion Dollar Companies Swallowing Each Other
I own a few shares in a company called Freeport-McMoRan Copper & Gold Inc. (FCX). Monday they announced a bid to buy copper producer Phelps Dodge Corp. (PD) for $25.9 Billion. [yeah thats Billion]. Interestingly enough, as part of the bid FCX will pay $500 million if it backs out while PD will pay $750 million if it bails.
As if that wasn’t exciting enough, yesterday an analyst floated a rumor that BHP Billiton Ltd. (BHP) would shortly announce a bid for FCX!!! Apparently the market liked that idea because prices for FCX and BHP did well. I also own shares of BHP. BHP is involved with oil, gas, copper, silver, zinc, lead, uranium, and copper by-products, including gold, aluminum, coking coal, iron ore, manganese, diamonds and fertilizers.
If you’re wondering why I own stock in BHP & FCX its because I think we’re going to see high inflation in commodity prices and a devaluation of the dollar. [search this blog for "inflation"]. Also read this post on “Hot Commodities”.
Here’s a good post on what the PD acquisition means at The Strategic Investor.
On another note, my dozen shares of PetroChina (PTR) have been doing pretty well. They’re up 10% in the month that I’ve owned them.
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November 23rd, 2006 at 6:41 am
I own these through Colonial First State’s Global Resources Fund (in Australia). I first bought into that fund at the beginning of 1999. The broker thought I was nuts
One of my best investments. And these firms still look cheap unless there is a global recession, instead of maybe just a US one.
November 23rd, 2006 at 8:06 pm
thats good to know, Iwas thinking of selling FCX if it shoots up to 70 in the short term.
of course, then I’d have to pay tax and figure out where to invest the proceeds.