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Trading the Nat Gas Ripple; Who Wins?

Wednesday, 11 Apr 2012 | 6:40 PM ET

With the energy sector turning negative for the year, and nat gas dropping below $2 for the first time in a decade, do you need to seriously reposition your portfolio?

Don’t panic. The Fast Money traders have some ideas.

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Karen Finerman recommends long CF Industries.

“Nat gas is a big input cost for CF Industries,” she says. “In 2011 it was around 45%. It was huge.” And in addition, she says ‘it’s a good story. So to have this additional benefit, it makes me like the name even more. I think there’s very meaningful upside.”

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Steve Grasso recommends watching Alpha Natural and Walter Industries.

“Both of those names are large producers of met coal. And met coal is harder to substitute for nat gas. Also people in this space feel as if met coal prices are in the process of bottoming,” he says.

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Tim Seymour is a buyer of Freeport McMoran.

“A lot of people have knocked down this stock for different reasons, but I think it looks interesting, here. The impact from the earthquake in Indonesia was overdone on this stock. I’d buy the dip.”

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Dan Nathan thinks Exco Resources is a buy, well almost.

“Yes, they explore for nat gas but this thing is becoming really oversold,” he says. “This is a name that I’m starting to look at.”

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Strategic investor Dennis Gartman is bullish of fertilizer stocks.

“Lower nat gas prices mean input costs for the ferts have been cut sharply,” he says. “And that benefits agriculture.” Although he didn’t gives us trades back on March 19th Gartman told us he was constructive on Potash and Mosaic .

And if you’re comfortable with a more complex trade, Gartman also suggests a long position in Canada’s dollar against a short position in the euro. “The fact that the world has to come to Canada for gas, wheat and more and in that nation’s favor.”

Gartman on Nat Gas & Canadian Dollar
Dennis Gartman, The Gartman Letter, weighs in on what investors need to watch in the natural gas space. He also says the trend shows signs the Canadian dollar will rally versus the euro. With the Fast Money traders.






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Trader disclosure: On Apr 11, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Tim Seymour is long AAPL; Tim Seymour is long BAC; Tim Seymour is long INTC; Tim Seymour is long CSCO; Tim Seymour is long YHOO; Tim Seymour is long FCX; Karen Finerman is long AAPL; Karen Finerman is short AAPL CALLS; Karen Finerman is long BAC; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long HPQ; Karen Finerman is long CF; Karen Finerman is short SPY; Karen Finerman is short IWM; Karen Finerman is short MDY; Dan Nathan is long AAPL JAN 450 PUTS; Dan Nathan is long BAC APR 8/MAY7 PUTS; Dan Nathan is long XLF APR 15 PUTS; Dan Nathan is long IBM APR 200 PUTS; Dan Nathan is long WIMT APR 60 PUTS; Dan Nathan is long RIM JAN 20 CALLS; Dan Nathan is long IWM APR 78 PUTS; Steve Grasso is long ASTM; Steve Grasso is long AVAV; Steve Grasso is long BA; Steve Grasso is long D; Steve Grasso is long FRO; Steve Grasso is long MHY; Steve Grasso is long NUAN; Steve Grasso is long MO; Steve Grasso is long PFE; Steve Grasso is long PRST; Steve Grasso is long S; Steve Grasso is long XLU; Steve Grasso is long ZAZA

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CF
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FCX
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MOS
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POT
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XCO
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SPDR NRG SEL
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