Out Fox The $treet

Emerging markets stocks have been a major theme of the Opportunistic portfolios at Stone Fox Capital so I'm actually pleased to see investors fleeing emerging market stocks. Weak emerging market performance has reduced portfolio performance over the last 2-3 months, but it also provides opportunity for picking up long term growth stocks on the cheap. According to this AP report , EPFR Global reported that investors pulled $5.45B out of emerging market funds during just the second week of February alone. Yes, thats correct. It only took a few scary moments in the Middle East and some high inflation for investors to jump ship. Emerging markets have long been a traders market as investors jump in and out depending on the market direction. Oddly though, these markets provide a lot more long term growth and hence investors should be buying the dips in a lot of these markets. That doesn't appear to be the case though as I wrote yesterday about how the Chinese market has perked up...

That headline just seems incredible considering how much China already spends on generating power and especially the commodities such as copper and met coal. According to a research report by the China Electricity Council, China plans to spend $1.7 Trillion (yes Trillion) on power generation over the next 5 years versus the previous 5 years from 2006 to 2010. Yes, thats a whopping 68% increase! The expectation is that power generation capacity will rise 8.5% annually to 1.437 million megawatts by 2015. By 2015 only 33 percent of the power generation will be by non-fossil fuel and some 36% by 2020. So while the percent of non-fossil fuel will increase it appears that the fossil fuel (read coal) portion will continue to rise. Will it ever end? Can China continue to grow at an enourmous clip? Well, until they eclipse the US in GDP, they likely can keep it up. With roughly 4x the population, China should have a bigger economy. This growth means that copper at $4.27/lb might be relat...

Alpha Natural Resources (ANR) also had a decent earnings report, but the stock is mostly up 5% today because of the growing projections of coal import demand in India and surprisingly to a lessor extent in China. Recently China has become a big importer of coal and especially met coal due to huge growth and various issues with mine consolidation projects that have limited domestic coal production. Some people project that China will be able to limit coal imports as these mines come back online. India is a different story and will likely continue to need external coal supplies to meet surging demand. Supposedly the headlines numbers of $.62 for ANR was disappointing. It was significantly better then last year and suggestive of higher stock prices so sometimes its best to focus on the trend and the relative valuation. The most interesting comments were on the impact of China and India demand in both thermal and met coal. As the US tries to prevent new coal plants, the rest of the world c...