I think there is continued litigation involving some tailings disasters https://en.wikipedia.org/wiki/Vale_S.A.#Disasters_and_incidents which to be honest, I have not followed too closely even though I think I have owned the stock for 2 decades and just reinvest the dividends... If I am not mistaken, some of the court cases have been in foreign jurisdictions b/c BHP etc are involved or it was a JV...
It depends on how the thesis plays out. But often you don’t hold commodity stocks for a decade. My time horizon for these stocks is ideally 18-24 months. Sometimes longer, if the stock outperforms my original thesis.
The risk not mentioned in this piece is (I think) continued litigation involving some tailings disasters https://en.wikipedia.org/wiki/Vale_S.A.#Disasters_and_incidents which to be honest, I have not followed too closely even though I think I have owned the stock for 2 decades and just reinvest the dividends... If I am not mistaken, some of the court cases have been in foreign jurisdictions... Anyway, I included this piece in my Emerging Market Links + The Week Ahead (April 29, 2024) for today: https://emergingmarketskeptic.substack.com/p/emerging-markets-week-april-29-2024
Correct. There are some issues and lawsuits. But to be honest we know about them for years already and it’s priced into the stock. This is a risk of all mining companies and Vale is no exception.
They earn mostly in USD, while expenses are in BRL. By this logic, they are profiting from the BRL weakness. But when I overlay the chart of the BRL and Vale, they have a quite good correlation. Possible the weakness in Vale comes from sentiment.
I think there is continued litigation involving some tailings disasters https://en.wikipedia.org/wiki/Vale_S.A.#Disasters_and_incidents which to be honest, I have not followed too closely even though I think I have owned the stock for 2 decades and just reinvest the dividends... If I am not mistaken, some of the court cases have been in foreign jurisdictions b/c BHP etc are involved or it was a JV...
Anyway, I included this piece in my Emerging Market Links + The Week Ahead (April 29, 2024) for today: https://emergingmarketskeptic.substack.com/p/emerging-markets-week-april-29-2024
Interesting analysis. I assume this is a short term investment? You are not planning on holding Vale for a decade?
It depends on how the thesis plays out. But often you don’t hold commodity stocks for a decade. My time horizon for these stocks is ideally 18-24 months. Sometimes longer, if the stock outperforms my original thesis.
The risk not mentioned in this piece is (I think) continued litigation involving some tailings disasters https://en.wikipedia.org/wiki/Vale_S.A.#Disasters_and_incidents which to be honest, I have not followed too closely even though I think I have owned the stock for 2 decades and just reinvest the dividends... If I am not mistaken, some of the court cases have been in foreign jurisdictions... Anyway, I included this piece in my Emerging Market Links + The Week Ahead (April 29, 2024) for today: https://emergingmarketskeptic.substack.com/p/emerging-markets-week-april-29-2024
Correct. There are some issues and lawsuits. But to be honest we know about them for years already and it’s priced into the stock. This is a risk of all mining companies and Vale is no exception.
So Vale is also a copper play via VBM?
Does Vale earn it's money in BRL or in USD?
They earn mostly in USD, while expenses are in BRL. By this logic, they are profiting from the BRL weakness. But when I overlay the chart of the BRL and Vale, they have a quite good correlation. Possible the weakness in Vale comes from sentiment.
Thank you. A great summary. Cheers john
Thanks 🙏
Cheers 🍻