Seekingalpha reported that shares of Kaiser Aluminum Corporation are up more than 15% so far in 2012. However, KALU's performance so far in 2012 is very impressive relative to its peers. Other leading Aluminum companies such as Alcoa, Century Aluminum Company, Alumina Limited and Aluminum Corporation of China are all down so far in 2012. Fabrication vs Production

Unlike its peers, KALU is focused on the fabrication side of the aluminum business, not the production of primary aluminum. Because of this, KALU has not been hurt by weak aluminum prices. To the contrary, lower aluminum prices have helped KALU report record earnings for the H1 of 2012. Since KALU is in fabrication business this means that the company sells finished aluminum products to companies in the aerospace and automotive sector. Primary Aluminum is an input cost for KALU. While some companies such as Alcoa do have significant fabrication businesses, KALU is the only pure play on aluminum fabrication.

Balance Sheet;
In addition to being in a slightly different business than most aluminum companies, KALU is also in a different financial state. Currently, KALU has USD 65 million in net debt and just over USD 1 billion in equity. Alcoa has USD 7.8 billion in net debt and equity of USD 8.9 billion; Century Aluminum has USD 101 million in net debt and equity of USD 540 million; Alumina has USD 470 million in net debt and equity of USD 1.76 billion. Compared to its peers, KALU is in a much stronger financial position. The weak financial position of other aluminum companies has probably played a role in the weak performance so far in 2012.

Short Interest;
Despite the rally, many investors are still skeptical of KALU. Short interest currently stands at 1.84 million shares or 11.5% of the float. If the company continues to report strong numbers, the potential for a short squeeze is high.

Source - Seekingalpha.com

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