Dwight Anderson: Long Palladium, Short Platinum (Ira Sohn Presentation)

We're posting up notes from the Ira Sohn Conference.  Ospraie Management's Dwight Anderson gave a presentation on going long palladium, short platinum, as well as long Westlake Chemical (WLK).  He's a fundamental investor focused on bottom-up research, mines, agricultural.  Was previously at Tiger Management, Tudor Investment Corp.

Long: Westlake Chemical (WLK). Ethylene, and Vinyls (options on improving housing volumes) Petroleum-based competitors are bleeding cash. Westlake improves from shale in US. As of 2013, Ethyne prices will drop by 0.25 a pound, a 50% increase in WLK eps. $55, should earn $5 this year. Replacement value $75. Management is expanding capacity, still $150M FCF.


Long Palladium/Short Platinum:  Changes in prices gets no supply response for Palladium. Platinum: auto is 65% of demand, then tech, dental, jewelry, per vehicle can't be less, despite engineers efforts. In 2007, 75M vehicles, 4.1M oz. of platinum, but at 85M vehicles, it fell to 3.1M. So story is simple, Palladium is taking share from Platinum.


P.S. - Don't miss other presentations from David Einhorn, John Paulson, Bill Ackman & more: notes from Ira Sohn Conference 2012.

Bluescape Resources' John Wilder on Natural Gas: Ira Sohn Presentation

We're posting up notes from the Ira Sohn Conference.  Bluescape Resources' John Wilder gave a presentation on energy and natural gas.

Energy investor, TXU, Entergy turnarounds. Natural gas outlook. "Be careful what you wish for!"

Supply and demand situation, Fundamentals: Huge increase in supply in NA, in 2011 highest yoy increase in history, 30% supply due to technology breakthroughs. Gas rig activity doubled from 02-08, but was only 40% of it from the 4 main plays: Marcellus, Fayatteville, Haynesville, Barnett. Demand was flat. Had huge increase in gas power generation, but not enough to keep up. It's switching from coal.

Price dropped from oil parity to coal parity, now it's cash cost of production. Expect to go back up to coal substitute pricing, but never goes back to oil parity.

Is low-cost natural gas sustainable? Marcellus is $2.85 break even price, the rest are over $4.00. Marcellus has about 10-15 years of supply. Well productivity has increased, 52% gains. 700-800 rigs to keep up with the depletion loss.

Wildcard: what is the impact of high-yield gas? You get a blend of NGLs. Ethane, propane, butane, even gasoline. 10 years of demand, 252 TCF in recent finds, in some cases you don't even need any cash contribution from the gas itself because of the NGLs. Will LNG be exported? Will vehicles ever use natural gas? Very little chance of material impact in the short run.

Implications? WLK good long. Thinks prices stay low for a while.


P.S. - Don't miss other presentations from David Einhorn, John Paulson, Bill Ackman & more: notes from Ira Sohn Conference 2012.