Sell BUCY

Robert Hsu, September 11, 2008

Remember the good ol' days when you could put your money into almost any commodity stock and then all you had to do was watch your profits increase? Those times were great for investors, since for over two years a global commodities boom pushed shares of companies dealing with oil, iron ore, coal, copper and other raw materials to new highs. And commodities were also a great way to hedge against inflation. Those were the days…

Unfortunately, all we have left from the commodities boom are good memories. The worldwide demand for raw materials showed no signs of slowing, and we, along with many other investors, were in on the action. One great way we profited from the boom was by investing in a world leader in the design and manufacture of high-productivity mining equipment for surface and underground mining -- Bucyrus (NASDAQ: BUCY).

Investing in BUCY was a great way to increase our exposure to the commodities boom, as mining companies asked for BUCY by name. It supplied mining equipment from draglines, giant shovels, drills and other excavation tools to mine coal, copper, iron ore, oil sands and other minerals. So as you can see, BUCY was right in the thick of it, benefiting from the huge demand from all sorts of commodities.

The company is based in Wisconsin, but BUCY is a truly global company. (Of course it was –- this is Asia Edge!) About three-quarters of BUCY's business come from outside of the U.S., and much of that is from the Asia-Pacific area. This has been great for BUCY's bottom line, since the high demand for commodities in recent years has come from Asian countries. I have discussed this trend many times, including in this China Strategy article from earlier this year.

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