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Incorrect Investing


With more copper and gold than just about any company in the world, Freeport-McMoRan’s long been a standout stock. But in December the Times broke a story saying that Freeport paid large sums of money to Indonesian military officers to look the other way so it could exploit the Papua Province, decimating the landscape, all to keep the largest gold mine in the world operating at full tilt as the yellow metal soared to $550 an ounce. That’s right—another buying opportunity! After the Times story, you caught a twelve-point rebound off a $52 base almost immediately. And there are more buying opportunities every time the Times does a follow-up. Got one just last Saturday, when the paper reported on federal, state, and local inquiries into the mining problem. I can see how this stock, which was trading at $64 last week, might go to $80 this year, on Chinese demand alone. More dogged Times reporting can only help.

Let’s round out this abysmally incorrect portfolio with two flat public-policy embarrassments—Altria and Votorantim Celulose e Papel. Here’s a duo of high-yielders—4.3 percent and 5 percent—despoilers of lungs and forests that could have a huge 2006. Altria’s about to split into three companies, one domestic and one international tobacco company, and Kraft, which just makes bad-tasting processed food but can’t be considered a brigand unless the obesity police take charge of the FDA. The split—I believe the parts will be worth more separately than they are together—should drive this $74 stock right to $105. VCP, the Brazilian paper company, knows that no country filled with tree huggers like the United States can compete with a company that can clear-cut arboreal bounty like eucalyptus with impunity. Much more paper can be gleaned and reamed from that treasured tree than anything we have, and the Brazilian government obviously doesn’t give a hoot about the ecoconsequences.

I know, you need a shower after just looking at your portfolio if you go my route. Yet, think about what happens when you clip that dividend from VCP and send it to the Sierra Club or Greenpeace. Imagine all the money you can send the American Cancer Society from Altria’s quarterly dispensations. And if you are really troubled by the profits, there’s always the United Way. Of course, it’s had its own scandals.

James J. Cramer is co-founder of He often buys and sells securities that are the subject of his columns and articles, both before and after they are published, and the positions he takes may change at any time. At the time of this writing, he owned Halliburton and Altria.



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