Playing an Alcoa Bid

This column was originally published on RealMoney on Feb. 13 at 7:34 a.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

For months now, I have been saying that Alcoa (AA Quote) will be bought. Any underperforming asset in the mineral business -- whether it be Alcoa or Phelps Dodge (PD Quote) or Inco -- will be bought by a foreign company desperate to put some of its winnings to work before someone else does.

We are in the age of minerals, and the assets that are available are dwindling. Those who make the acquisitions -- CVRD (RIO Quote), Freeport (FCX Quote) and Yamana (AUY Quote), for example -- will be the winners. The losers will be those left at the altar because you need worldwide distribution and a global presence.

It's not that Alcoa's so bad, although it has been undermanaged. It's that it has gotten so small relative to good companies like BHP (BHP Quote) and Rio Tinto (RTP Quote). ...