Dear Friend,

We upgraded our FCX investment rating to Overweight from Underweight owing to higher metals prices, including the byproducts moly, gold, silver, and cobalt as well.  Our price target upgraded to $70 from $53 may be understated assuming no share repurchases, projects nor uses of $2 to $14 billion net cash balances in 2013 to 2016.  We were too conservative in judging copper prices to be ahead of themselves last March 24th, and the broad consensus may already anticipate a $0.25 to $0.50 per pound dip in copper prices as the world economy rebounds.

We regard ATI's $6.50 per share price drop yesterday as a fine entry point.  We give thought to increasing our $50 price target as import penetration fell by 9% of the market and ThyssenKrupp postpones/cancels more machines.  The commodity stainless steel environment appears to enter a "wonderful" phase similar to 2006 to 2007 when EBIT was near $300 mm from stainless alone.  There  is a chance that Boeing and Airbus debug  their 787 and A380 programs, and titanium volumes improve sooner than expected in 2010.  While we have increased our estimates of future stainless EBIT by $100 mm annually, we could be conservative.  Record stainless profits surpassing 2006-2007 near $300 mm EBIT levels (excluding silicon electrical steels) are plausible.  There is a thesis in favor of a $400 mm EBIT upturn if a “perfect scenario” evolves.  

Our firm ranked #1 among over 250 research firms globally in the first-half according to First Coverage.  We have attached their press release and summarized our thought process in the attached documents.

First Coverage First-Half 2009 Top Firms

                                                                                                HQ                       # Ideas                 Return

John Tumazos Very Independent Research, LLC            New Jersey             47                      30.51%

Johnson Rice & Company LLC                                          New Orleans           42                      18.05

William Blair                                                                          Chicago                  67                      16.60

Merriman Curhan Ford & Co                                              San Francisco        38                      15.39

Avian                                                                                      Boston                    12                       13.99

Piper Jaffray                                                                          Minneapolis           17                       13.47

GMP Securities                                                                    Toronto                  146                      13.34

Salman Partners                                                                   Vancouver              79                       13.10

RW Baird                                                                               Milwaukee              75                       12.7

Faithfully,