market folly

We're posting up notes from the Ira Sohn Conference.  Ospraie Management's Dwight Anderson gave a presentation on going long palladium, short platinum, as well as long Westlake Chemical (WLK).  He's a fundamental investor focused on bottom-up research, mines, agricultural.  Was previously at Tiger Management, Tudor Investment Corp.

Long: Westlake Chemical (WLK). Ethylene, and Vinyls (options on improving housing volumes) Petroleum-based competitors are bleeding cash. Westlake improves from shale in US. As of 2013, Ethyne prices will drop by 0.25 a pound, a 50% increase in WLK eps. $55, should earn $5 this year. Replacement value $75. Management is expanding capacity, still $150M FCF.


Long Palladium/Short Platinum:  Changes in prices gets no supply response for Palladium. Platinum: auto is 65% of demand, then tech, dental, jewelry, per vehicle can't be less, despite engineers efforts. In 2007, 75M vehicles, 4.1M oz. of platinum, but at 85M vehicles, it fell to 3.1M. So story is simple, Palladium is taking share from Platinum.


P.S. - Don't miss other presentations from David Einhorn, John Paulson, Bill Ackman & more: notes from Ira Sohn Conference 2012.