I think it’s a good time to give shares of Thompson Creek Metals (TC) a rest. Say a three to six month rest. Today I’m selling Thompson Creek Metals out of my Jubak’s Picks portfolio http://jubakpicks.com/the-jubak-picks/ .

The market seems to be rotating away from commodities and materials stocks as fears about an economic slowdown in the United States, China, Brazil, India or the economy of your choice move to the fore. I don’t think the bottom is about to fall out of the sector in a replay of 2008, but I do think it will be hard for stocks in this sector to move up significantly against this tide. A month or two back it seemed like it would be time to look for a bottom in a commodity such as copper in July or so.

I think global economic growth is on a less certain path today than it was a month or two ago. I’d still start looking for a bottom in selective commodities in July but I wouldn’t be completely surprised if I didn’t see one arriving on that schedule like the 4:10 to Yuma.

I think there are also stock specific reasons to give Thompson Creek a rest right now. The company is scheduled to report earnings after the markets close on Thursday May 5. (The company has scheduled its conference call for 8:30 a.m. I don’t think the company is going to report a clear road map to future growth.

On April 25 Thompson Creek announced that it had ended an option it had signed in 2008 to buy a stake in the Mount Emmons molybdenum project in Colorado from U.S. Energy. Ending the option won’t have any material effect on the company’s financial results but it is likely to focus attention on the company’s difficult transition in 2012.

By the company’s own guidance production at its big Thompson Creek mine will go from 22-24 million pounds of molybdenum in 2011 to 15-16 million pounds in 2012. Costs will go up at the mine, the company notes in its most recent investor presentation, to $8.50-$9 a pound in 2012 from $6-$7 a pound in 2011.

Eventually, as in 2013, Thompson Creek will bring new mines into production, such as the mixed copper/molybdenum Mt. Milligan mine projected to begin operation that year, that will replace most of the production from the Thompson Creek mine and lower costs again. The new Berg mine, still in development, could follow shortly on that.

But until Thompson Creek Metals gets closer to production at those new properties, one of which (Mt. Milligan) it only acquired in 2010, the company is going to strike a lot of investors as one caught short by production trends that the company should have been able to anticipate.

I’d like to let that kind of dissatisfaction among investors build—while I sit on the sidelines—and then move back into the stock when it has either broken down further in price (the current range is a very tight $12.09 for support and $12.55 for resistance) or the company is closer to production at Mt. Milligan. (And maybe in the best of all worlds, both.)

I’m selling these shares with a 24% loss since I added them to the portfolio on June 26, 2007.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. The mutual fund I manage, Jubak Global Equity Fund, may or may not now own positions in any stock mentioned in this post. The fund did own shares of Thompson Creek Metals as of the end of March. For a full list of the stocks in the fund as of the end of March see the fund’s portfolio at http://jubakfund.com/about-the-fund/holdings/

It clearly hasn’t been enough.

On February 24 Thompson Creek Metals (TC) reported fourth quarter and full year results that showed record production in 2010 of molybdenum, and an increase in revenue for the fourth quarter of 48%. Net income adjusted to exclude the accounting loss from outstanding stock warrants (incurred when the company switched to U.S.-style GAAP accounting in 2010) increased in the quarter by 43%.

Thompson Creek shares closed at $13.58 that day and it’s been pretty much downhill ever since. On March 9 the shares closed at $12.28.

Two problems, one short-term and one long term, I think explain that trajectory. Read more

Just because your favorite roller coaster is closed for the winter season doesn’t mean you have to give up thrills and spills—there’s always the copper market.

Copper hit a record high on the London Metal Exchange on January 4, and moved to a three-and-a-half year high in Shanghai. And then on January 5 copper dropped by 1.1%, the most since December 16.

In the short-term, I think copper, the other golden metal, could still move higher. There’s plenty of speculative juice for the remainder of January. I’d then look for a pull back of some sort around the beginning of February on a reversal of speculative sentiment. If you’re attracted to copper because of the likely long-term supply shortages and you haven’t built positions yet, I’d wait to see if early February brings the kind of dip that might let you slip a few shares of Freeport McMoRan Copper & Gold (FCX) or Thompson Creek Metals (TC) into your portfolio.

Here’s the speculative picture as best as I can lay it out now. Read more

Update Thompson Creek Metals (TC)

It’s not like you you’re going sneak up on an undiscovered bargain in a copper mining stock these days. Copper has been selling near record highs this year on an anticipated shortfall in supply in 2011 and on increased demand from commodity investors. On December 7, copper closed at $4.05 a pound. The close marked a retreat from a new all-time high but was still the highest price for the metal since July 2008.

And copper stocks such as Freeport McMoRan Copper & Gold (FCX) and Southern Copper (SCCO) have responded by moving up to 52-week highs. They’ve pulled back a bit in the last day or two but Freeport McMoRan still closed at $108.60 on December 8. That’s below the 52-week high at $114.24 but not by a whole lot. Southern Copper closed at $45.73. That’s just below the 52-week high at $47.48.

The closest thing I can find to a copper bargain is Thompson Creek Metals (TC), which closed today at $13.20 and has a 52-week high of $15.20.

Why is Thompson Creek a copper bargain? Read more

Update Thompson Creek Metals (TC)

Today Thompson Creek Metals (TC) confirmed what the market had long expected: that when the company reports its fiscal 2009 financial results in February, it will switch to U.S. GAAP from Canadian accounting rules. The big impact will be that the company has to mark its outstanding 24 million warrants to fair value each quarter and take a one-time charge or credit to adjust them to that fair market price.

 The result for fiscal 2009 will be a pre-tax, non-cash charge of about $93 million. The charge will be large enough, the company said, to turn net income for fiscal 2009 negative.

The change should have no effect on the price of the shares (no matter whether it should or not) since Wall Street analysts and institutional investors have 1) known this change was coming for months and 2) normally look past this kind of non-cash accounting charge anyway.

More significant is the price of molybdenum, which had rallied by about 25% in the four weeks through January 22 to reach nearly $15 a pound from $12 in mid-December. (Prices have retreated a bit since then on worries about when the Chinese government would slow the country’s economy.)

The  big questions for Thompson Creek Investors—and the stock is in my Jubak’s Picks, Jubak Picks 50, and personal portfolios—is why the price jump and where the price of molybdenum might be headed. Read more