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iShares Launching Commodity Production ETFs To Take Share (BLK, VEGI, MOO, FILL, DIG, PICK, XME, RING, GDX, SVLP, SIL)

Administrator — Fri, 03 Feb 2012 15:33:50 +0000

They say there is an ETF for just about any investing strategy and just about any sector. Today, there are five new ETFs hitting the market from BlackRock, Inc. (NYSE: BLK) under its iShares ETF platform. These new ETFs will cover producers of (rather than the commodities) of agriculture, energy, select metals and mining, gold, and silver. There is going to be an overlap here against other competing ETF products so we are only going to list the major competitors of these already on the market.

iShares MSCI Global Agriculture Producers Fund (NYSE: VEGI) targets the front end of the production chain (fertilizers or agricultural materials) while excluding exposure from companies at the end of the production chain (packaging and marketing). This is a bit similar to but nowhere near identical to the Market Vectors Agribusiness ETF (NYSE: MOO).

iShares MSCI Global Energy Producers Fund (NYSE: FILL) tracks the MSCI ACWI Select Energy Producers Investable Market Index. This is similar to the ProShares Ultra Oil & Gas (NYSE: DIG), but without the leverage.

iShares MSCI Global Select Metals & Mining Producers Fund (NYSE: PICK) aims to track the MSCI ACWI Select Metals & Mining Producers Ex Gold & Silver Investable Market Index. This one is not identical to but has overlaps with the SPDR S&P Metals & Mining ETF (NYSE: XME).

iShares MSCI Global Gold Miners Fund (NYSE: RING) aims to track the MSCI ACWI Select Gold Miners Investable Market Index. We consider this an alternative to the Market Vectors Gold Miners ETF (NYSE: GDX).

iShares MSCI Global Silver Miners Fund (NYSE: SLVP) aims to track the MSCI ACWI Select Silver Miners Investable Market Index. We would consider its an alternative to the Global X Silver Miners ETF (NYSE: SIL).

As far as why these are different from some other ‘production’ ETFs, iShares explains that these include only companies at, or near, the initial phase of production of the commodity. Investors can target the front end of the production chain instead of including the back-end of the production chain to focus on the aspects more sensitive to fluctuations in the underlying commodity price. Companies further down the production cycle are impacted by a number of factors in addition to commodity prices.

An ETF for just about anything… now competing ETFs for many more strategies.

JON C. OGG

Filed under: 24/7 Wall St. Wire, ADR, Agriculture, Commodities, Economy, Editor's Picks, ETF, Index, Metals Tagged: BLK, DIG, FILL, GDX, MOO, PICK, RING, SIL, SVLP, VEGI, XME

Goldman Sachs Says Yes On Metals & Mining: Growth Vs. Value (FCX, AA, CENX, RS, WOR, XME, COPX)

Administrator — Wed, 31 Aug 2011 14:22:48 +0000

Is the world economy slowing or are we at the trough? It depends upon whom you ask. A report today from Goldman Sachs is highlighting the great value in the metals and mining sector noting that global metal demand is likely to remain fairly healthy. The driver of course is emerging markets. The larger issue is that this generally seems to be a more of a valuation call than a growth call.

Goldman Sachs’ research team noted that the most recent price drop in many of the metals and mining shares has created very attractive entry points for many of the best stocks in the sector. The firm is remaining bullish on copper fundamentals, which is hard to say is a value call. To be bullish on copper almost always translates back to the global growth trade.

Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) was reiterated as a “Buy.” Goldman is less aggressive on Aluminum, but has some bright spots. Alcoa Inc. (NYSE: AA) was reiterated as “Buy” as a move away from the linkage to spot aluminum prices due to strong aerospace business opportunities coming down the pipe in the years ahead. Freeport-McMoRan shares are up 3.75% at $48.35, bot bad for a $45 billion market cap. Alcoa is up almost 4% at $12.84 this morning.

Century Aluminum Co. (NASDAQ: CENX) was raised to “Neutral” from “Sell,” but it needs to be noted that the target went to $11.50 from $14.50 before; the 52-week range is $8.72 to $20.76. Shares are still up 5% at $12.38 on the news.

Reliance Steel & Aluminum Co. (NYSE: RS) was raised to “Buy” from “Neutral,” but the price target was taken to $52 from $60 against a 52-week range of $36.62 to $60.60. Reliance shares are up a sharp 5% at $43.26 this morning.

Worthington Industries, Inc. (NYSE: WOR) in steel and metals processing was not given the same love. Goldman Sachs cut the rating there to “Sell” from an already cautious “Neutral” rating. Worthington shares are down 2.5% at $16.28 on the call and the 52-week range is $14.07 to $23.75.

The key ETF is on the move too. The SPDR S&P Metals & Mining (NYSE: XME) is up 1.8% at $59.66 and its 52-week range is $47.31 to $77.44. In copper mining ETF trends, the Global X Copper Miners ETF (NYSE: COPX) is up over 3% at $17.15 against a 52-week range of $12.35 to $20.98.

JON C. OGG

Filed under: Analyst Calls, Economy, Emerging Markets, International Markets, Metals, Value Investing Tagged: AA, CENX, COPX, FCX, RS, WOR, XME

Alcoa Able To Sell Less-Bad As Good (AA)

247wallst — Wed, 08 Jul 2009 20:30:07 +0000

Alcoa Inc. (NYSE: AA) posted a narrower-than-expected loss of -$0.26 EPS on a non-GAAP basis and -$0.32 EPS from continuing operations. Revenues were down sharply to $4.24 billion (from $7.62 billion a year ago), but also narrower-than- expected. Thomson Reuters had estimates at -$0.38 EPS and $3.93 billion. The company generated cash from operations in the second quarter of 2009 of $328 million, an improvement of $599 million from the first quarter.

The year-over-year comparisons remain atrocious, but this is actually a 2% sequential gain in revenues. To illustrate how challenging the environment is, here are its issues on base metal prices:

The average price of aluminum on the London Metal Exchange in the second quarter of 2009 was $1,485 per metric ton (mt), a nine percent increase from the first quarter of 2009, but a 49 percent decrease from the second quarter of 2008.

Alcoa has also claimed to have achieved about $1.0 billion in procurement savings through the first half of the year, which it says is close to two-thirds of its annual target. It listed its overhead savings so far this year as about $270 million, which is supposed to be 134% of the 2009 target.

Alcoa shares closed up 0.5% at $9.46 on the day, and shares are halted in after-hours trading. Its 52-week trading range is $4.97 to $35.66.

We showed an eight quarter parallel to both the S&P 500 ETS in the SPDR and against the SPDR S&P Metals & Mining ETF (NYSE: XME) to show how this is not really correlated to the returns of the indexes. But in after-hours trading, the XME ETF is trading up 0.65% at $33.10 after closing down 1.4% at $32.88.

Jon C. Ogg
July 8, 2009

Posted in Earnings, Metals Tagged: AA, XME

Further Evidence That Alcoa Has Low Correlation To Earnings Season Trends (AA, SPY, XME)

247wallst — Wed, 08 Jul 2009 16:10:46 +0000

Alcoa, Inc. (NYSE: AA) is one of the first stocks that kicks off earnings season every quarter. Today is its actual earnings report after the closing bell. What is interesting is that traders try to use this stock as a bogey for measuring earnings trends for the market as a whole and as well for the metals and mining sectors. We have always held that because the company has had so many problems that everything might be coincidental rather than correlated. We wanted to compare this to the S&P 500 measured by the corresponding performance of the SPDRs (NYSE: SPY). The SPDR S&P Metals & Mining (NYSE: XME) ETF is what we use to track broader metals as a whole and it has Alcoa as a 3%+ component. While the recent earnings seasons and markets have been extremely volatile, we ran trends going back for 8 of the last earnings seasons comparing Alcoa to the SPYDERS and to the XME ETF.

What we did was compare the Alcoa trend to both sector and market ETF’s and gave a one-day percentage change of each, a 5-trading-day percentage change, and a month-end percentage for each. The data was taken from the earnings reporting date listed by Alcoa itself and does not take into consideration any mid-quarter or interim updates on guidance.

April 7, 2009
Versus 1-day change AA +3.4%; SPY +1.1%; XME +2.1%
Versus 5-day change AA +16.1% ; SPY +4.4%; XME +10.9%
versus month-end change AA +16.2%; SPY +7%; XME +18.6%

January 12, 2009
Versus 1-day change AA -5%; SPY +0.1%; XME +3.1%
Versus 5-day change AA -17%; SPY -7.3%; XME -8.5%
versus month-end change AA -22.6%; SPY -4.7%; XME -2%

October 7, 2008
Versus 1-day change AA -11.9%; SPY -2.5%; XME +1.2%
Versus 5-day change AA -22.3%; SPY -0.1%; XME +1.8%
versus month-end change AA -31.5%; SPY -3.7%; XME -6.7%

July 8, 2008
Versus 1-day change AA -2.4%; SPY -1.9%; XME +0.6%
Versus 5-day change AA +6.7%; SPY -4.9%; XME +3.5%
versus month-end change AA +4.4%; SPY -0.3%; XME -0.6%

April 7, 2008
Versus 1-day change AA -0.6%; SPY -0.1%; XME +2.6%
Versus 5-day change AA -9.3%; SPY -2.9%; XME -0.9%
versus month-end change AA -6.6%; SPY +0.9%; XME -0.9%

January 9, 2008
Versus 1-day change AA +0.6%; SPY +0.6%; XME +2.6%
Versus 5-day change AA -1.9%; SPY -2.4%; XME -1.9%
versus month-end change AA +5.8%; SPY -2.1%; XME +4.8%

October 9, 2007
Versus 1-day change AA -2.5%; SPY -0.1%; XME +0.5%
Versus 5-day change AA -6.1%; SPY -1.7%; XME -2.2%
versus month-end change AA +0.1%; SPY -1.1%; XME +3.6%

July 9, 2007
Versus 1-day change AA -1.6%; SPY -1.4%; XME -1.5%
Versus 5-day change AA +10.4%; SPY +1.1%; XME +1.3%
versus month-end change AA -9.8%; SPY -4.8%; XME -10.1%

The only direct correlation we have been able to deduce as far as how indicative Alcoa is for the market as a whole measured by the S&P 500′s SPYDER ETF is that 7 of 8 of the last quarters you have seen the market close in the same direction as Alcoa on the day after earnings. We have found very little S&P 500 correlation to Alcoa through a 5-day or end of month basis.

In 7 of the last 8 quarters if Alcoa closed up or down the day after earnings then the XME closed at least in the same direction (positive or negative) at the end of that month. That may also be coincidental, though, because on the day after Alcoa earnings we have yet to find any solid data showing the correlation in the day after reaction between Alcoa and the XME.

There are of course some other trends noticed here, but the outcome on our end so far is that there should still be a very low correlation on how Alcoa acts after earnings versus any direct trend to expect during earnings season. The issue is that when you take the rate of change into consideration here, we feel that there is more coincidence rather than direct correlation over the time period used to measure.

JON C. OGG
JULY 8, 2009

Posted in Earnings, ETF, Index, Metals Tagged: AA, SPY, XME

ETF Winners & Losers (June 11, 2007)

247wallst — Mon, 11 Jun 2007 15:47:09 +0000

Stock Tickers: DBB, XES, GAF, RYU, DBA, EWZ, GML, URE, XME, XHB, TLO, ICF, EWL, EWY

DJIA             13,424.96; -0.57 (0.00%)
S&P500       1,509.12; -1.45 (0.10%)
NASDAQ       2,572.15; -1.39 (0.05%)
10-Yr Bond    5.137%; +0.019%
NYSE Volume       2,485,616,000
NASDAQ Volume 1,677,733,000

WINNERS

PowerShares DB Base Metals (DBB) 2.34%
SPDR S&P Oil & Gas Equipment & Services (XES) +2.5%
PowerShares DB Commodity Index Tracking Fund +1.80%
SPDR S&P Emerging Middle East & Africa (GAF) +1.76%
Rydex S&P Equal Weight Utilities (RYU) +1.73%
PowerShares DB Agriculture (DBA) +1.70%
iShares MSCI Brazil Index (EWZ) +1.68%
SPDR S&P Emerging Latin America (GML) +1.65%

LOSERS

Ultra Real Estate ProShares (URE) (-2.89%)
SPDR S&P Metals & Mining (XME) (-2.14%)
SPDR S&P Homebuilders (XHB) (-1.95%)
StateStreet Trust LEHMAN L-T Treasury (TLO) (-1.82%)
iShares Cohen & Steers Realty Majors (ICF) (-1.70%)
iShares MSCI Switzerland Index (EWL) (-1.06%)
iShares MSCI South Korea Index (EWY) (-0.95%)

Jon C. Ogg
June 11, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.