Monday, March 13, 2006

INCO LTD (N)- $46.20

Bought N@ $46.08 (recommended
stop-loss order @$44.70).
Stock is off 12% in the last few weeks and it looks as if its near longer term uptrend line. Copper prices have stayed at 52 week highs as well. These guys are buying out Falconbridge (copper/nickel commodity company), but there are rumors that they may have to raise their bid price to complete the acquisition. There is likely to be no additional information on this topic until May 15th, although the scuttlebutt started in the UK last week (the rumored bidder is Xstrata PLC, which owns 20% of Falconbridge

In any event, I'm looking for a bounce to around $51 (gain of 10%) and have set a stop-loss at $44.70 (downside loss would be 3.5%) and this would appear to be a decent risk/return tradeoff. I probably wouldn't be using a stop loss order if i was bottom-fishing at the trough of a commodity cycle, however breakdowns have historically been nasty in this name (ranging from 33%-7! 5% declines).

No comments: