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Alcoa AA is only worth $8 billion. That's astounding. This is an Alcoa that has plants under management that cost that much to build. It is a profitable Alcoa, one that generates a huge amount of cash flow.
Its last quarter, which kicked off the earnings season, was a genuine upside surprise. I can't recall a time in the most recent era that Alcoa has been better run. And it doesn't seem to matter. Alcoa is perceived to be so linked to the recession in Europe and the slowdown in China that CEO Klaus Kleinfeld can't seem to win.
I looked at Alcoa this morning at multi-year lows, although it's still a few bucks above the 2008-2009 debacle, and I think how much would I, if I were at my old hedge fund, just like to stand there and buy AA down every $0.25, getting bigger as it went down. The idea that this company isn't worth more than $8 a share is absurd. Yes, China is slowing and dumping a lot of aluminum. Yes, the price of aluminum is going down, and that hurts. Yes, they are hurt by a strong dollar.
But they are making money. They are doing everything right.
Someday this will matter. It clearly doesn't right now. We don't have that kind of market where you can say, "I don't care I am just going to own it anyway," because almost no one runs money like that anymore.
That said, it is the definition of cheap. It just keeps getting cheaper.
