Friday, October 31, 2008

Last on lithium: a comment about my morning mailbag

A corner of my mailbox had this for me to read this morning, and it's worth sharing quickly so that I can clear up a difference. A reader wrote:

"I was looking at SQM as a possible trade when all of a sudden you cautioned about Lithium. SQM is being hyped on that, although they have other lines. Should I read that as a caution on SQM? A glance at their financials looks pretty good, but then so do a lot of things at first glance."

There's a big difference between the prospectors and the producers. I like SQM too, and along with other big regional FMC keep the world demand for Lithium satisfied. I have no problem with them, my problem is with the junior miners who stake off a puddle 15,000 feet up in the Andes and then pump their stock on dubious claims of being the answer to the world energy riddle. SQM is fine by me...plenty of phosphate exposure too, and the PE has come down strongly these last few weeks. Around here is a value level in which to enter.