They say timing is everything, luckily when it comes to long-term investing your timing can be terrible but you can still make yourself plenty of money!
One investor known for getting the timing of his calls more right than wrong is the Managing Director of Wholesale at Bell Potter Charlie Aitken. A couple of months ago Aitken put out a note stating that iron ore and oil may have bottomed for the year and would edge higher into December…
Whoops!
As readers will know, the price of these commodities – particularly oil – has continued to sink considerably.
For investors who didn't follow Aitken's call back in October, now could be time to revisit his thesis but with the added benefit that the share prices of a range of iron ore and energy producers are significantly lower today.
Which stocks should you buy?
The ASX obviously gives investors a plethora of options when it comes to resource stocks, this could arguably make the task of choosing stocks for your portfolio difficult. As it turns out however there may be no need to go beyond the majors to find opportunities at present.
Respected fund manager Pengana Capital runs the Global Resources Fund which provides exposure to high conviction global resource companies. In its November monthly update to unit holders, Pengana stated:
"Whilst not calling a bottom of the sector just yet we do believe the risk reward dynamics are moving increasingly in favour of investments in the resources sector"
The portfolio held 33 stocks at the end of November. The top position in the fund was BHP Billiton Limited (ASX: BHP), the second and third largest positions are both foreign listed stocks and the fourth largest position was Rio Tinto Limited (ASX: RIO).
One more stock worth considering
While it isn't disclosed whether Pengana owns Fortescue Metals Group Limited (ASX: FMG) or not, the 'third force' in Australia's iron ore mining sector has lost over 40% of its market capitalisation in the past three months alone, leaving it – just like BHP and Rio- trading near a multi-year low.
While risks remain for investors who are exposed to iron ore and oil, now could be the time to consider adding leading low cost resource stocks to your portfolio given the upside potential versus the downside risk.
