LUN CN

Presented by: Kurt Billick, Founder and CIO, Bocage Capital LLC at The Excellence in Investing: San Francisco conference

Publicly traded companies mentioned herein: Lundin Mining Corporation (LUN CN)

Highlights

Mr. Billick provided an overview of the current state of the commodities market and global macro environment, and said he sees commodity markets three years deep in bear market territory. He called it a “challenging, but exciting time” to look for opportunities in the wake of a huge, ten year bull market that was only briefly interrupted by the financial/ housing crisis in the US. He reviewed a complex diagram that mapped out the various resources necessary to drive the discovery, extraction, and processing of oil, and explained how/ why capital flows tend to dry up at/ near troughs and expand at peak prices. As result of a flat market, new capital will also flow into new commodity productive capacity (regardless of whether it’s oil, gas or metals) to relieve bottlenecks. Bottlenecks tend to attract capital, but once efficiencies are gained the tide can turn relatively quickly. Given this backdrop, Billick said he likes Lundin Mining as a potential long play on nickel, zinc and copper, and is bearish on E&Ps exposed to natural gas (although he did not name names, he suggested screening for those with higher leverage ratios).