Thursday, May 5, 2011
The Golden Arch - Buyout Not Burgers
In a recent post I suggested it's time to re-evaluate my metal and mining stocks. I suggested that many resource stocks (excluding forestry and ag companies) are fully priced, with little upside left and more risk on the downside. On May 2nd, a company in which I hold shares was bought out - at a significant premium. International Coal Group (ICO) has been purchased by Arch Coal (ACI) in an all cash deal valued at $3.4 Billion or $14.60/share. The deal is expected to close in Q2, so I won't sell into the market, and I will wait for the commission free capital from ACI. In the meantime, I'll pray the Canadian dollar weakens.This event was a pleasant suprise as I didn't expect ICO to be bought out. I first purchased ICO in January of 2010 with the intent on holding for many years. So, with two buy-outs ( ICO, LUN.TO) my resource exposure will fall dramatically.
I do expect another corporate event to occur with another miner I own - Hudbay (HBM) - but that's no reason to buy HBM now. I'll wait patiently for developments at HBM.