Macro Tsimmis

intelligently hedged investment

SELL Fording Canadian Coal Trust (FDG)

Posted by intelledgement on Tue, 22 Jan 08

We are taking our profits here due to increased risk of a recession. We still believe these coking coal assets are on the table as a result of the looming change in the Canadian tax code that essentially makes the royal trust corporate form obsolete, and that the restructuring will be at a relatively higher price. But increased risk of a serious recession here raises the likelihood that the restructuring may occur at a valuation that, while relatively higher (that is, FDG will be repriced higher relative to their peers) could be absolutely lower (because the price of everything will be reduced). In any event, should overall market conditions improve, there will be time to get back in here, if we have not allocated the funds elsewhere at that point.

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One Response to “SELL Fording Canadian Coal Trust (FDG)”

  1. LOL well we never did get back in here. When we got out in January at $32.57, we scored a 51% CAGR on this one, so we’ve got nothing to complain about…however, we would be remiss in failing to point out that FDG were bought out by Teck Cominco Limited (TCK) for the equivalent of $91.66 ($82 cash and the rest TCK stock) in a deal that was announced 29 Jul 08 and closed 30 Oct 08. So had we held on, we could’ve nearly tripled our profits.

    http://www.teckcominco.com/Generic.aspx?PAGE=Media+Pages%2fMedia+Detail&releaseNumber=08-20-TC&portalName=tc

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