Australian (ASX) Stock Market Forum

BHP - BHP Group

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Reece, thanks for your advice (and Nick too) and appreciate learning from your comments. I was lucky today with my short but it might have ended in tears...

My current thinking is to enter a position based on my analysis (reasoned!) and hold the position until proved wrong. So I'm staying short for now and looking for the recovery after it happens!

Cheers all,

hector
 
Nick Radge said:
My comment was a tongue-in-cheek slap at Duc which I'm sure he see's as a fun poke. We've met on several ocassions and share respect. He's also twice my size, so I do need to show respect :eek:

If you look at my comments you'll see they were actually written on January 24 from which time my subscribers have (hopefully) been long. I did not foresee these events of the last 24-hours because I cannot foresee anything into the future. I do however assess low risk/high reward opportunities using a variety of technical techniques. Sometimes I get lucky like this one. The market ebbs & flows, back and forth. It may well be a short over the coming days if you're bold but that is still not enough to remove the long positions. When the analysis has be proven incorrect, then I'll remove them.
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Hi Nick,
The thread is divided between traders [yourself + others] who are looking to trade significant swing points, and the Fundies arguing over the quality of the business and longer term implications.

Somewhere in here there is also an economic argument raging over the impact of the emerging economies, and their impact upon BHP amongst others.

As you know I am an Elliot Wave afficinado, with a Doctorate based on the research presented in relation to the applicability of EW. to econometric models of bank NPL's & interest rates.

By my count, BHP is doomed.

jog on
d998
 
reece55 said:
Fab
The recent rise in BHP stock price has been great - but mate, never say never. The stock was $24.00 almost exactly a month ago - $4.00 from where it is now. Personally, I would doubt we will see those levels again for a while, but to say that it will never do that is fraught with danger.

If you are looking to extract value out of dividends/capital returns, BHP is hardly the pick of the bunch. Try one of the many infrastructure trusts, buy a warrant and extract the dividend. These provide much better yields and are more stable - just my opinion though!

Cheers
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Reece55,

Note that I also use instalment warrant to dividend strip nevertheless my understand of this share buy back is that not only you get the franking dividend from it but also you can turn a potential Capital gain into a paper capital loss which is fantastic and is probably one of the best deal I have seen on the Aussie stockmarket
 
ducati916 said:
Hi Nick,
The thread is divided between traders [yourself + others] who are looking to trade significant swing points, and the Fundies arguing over the quality of the business and longer term implications.

Somewhere in here there is also an economic argument raging over the impact of the emerging economies, and their impact upon BHP amongst others.

As you know I am an Elliot Wave afficinado, with a Doctorate based on the research presented in relation to the applicability of EW. to econometric models of bank NPL's & interest rates.

By my count, BHP is doomed.

jog on
d998
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By your count accounting policy manages to change real cashfows.
 
Would love to know the 'EW count' on:

1. Chinese copper, iron, nickel and oil demand
2. The Australian vs England odds tonight

Make more money knowing these than shorting BHP due to inventory accounting issues.
 
haem & BSD

Accounting and cash-flows has already been detailed in previous posts.
If you still don't understand, or worse, still disagree, then so-be-it.

jog on
d998
 
ducati916 said:
haem & BSD

Accounting and cash-flows has already been detailed in previous posts.
If you still don't understand, or worse, still disagree, then so-be-it.

jog on
d998
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If you can find a someone to second your opinion that LIFO/FIFO policy changes cashflows then I'm all ears

Even better - can you find someone else who also believes BHP should be $8 based on their book depreciation?
 
BHP is doomed, according to ducati.
I would find it hard to get a better "buy" indicator for a stock.
Accordingly, expect BHP to appreciate no less than 20% by year's end on the basis of extrapolating his contra-indicated "values".
 
rederob said:
BHP is doomed, according to ducati.
I would find it hard to get a better "buy" indicator for a stock.
Accordingly, expect BHP to appreciate no less than 20% by year's end on the basis of extrapolating his contra-indicated "values".
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I think its amazing that BHP's share price hasnt moved from last year even though the profits have gone through the roof.

And the $10billion buyback is proof that BHP view their share price as undervalued.

ZFX management did something similar when the share price was in the $5-7 range.
 
haemitite said:
If you can find a someone to second your opinion that LIFO/FIFO policy changes cashflows then I'm all ears

Even better - can you find someone else who also believes BHP should be $8 based on their book depreciation?
Click to expand...

This really is the underlying problem, BSD thought FORD = F and you think I said $8 = the value after book depreciation.

I actually said nothing of the sort.
If you wish to *quote* me, at least try to be accurate.

As to LIFO/FIFO, as stated, I am indifferent to your acceptance or understanding.

jog on
d998
 
The most compelling reason for investing in BHP remains the attractive valuation. Given the general overvaluation of the market at this point, BHP remains a compelling opportunity. Unlike many stocks that are 'priced for perfection', BHP remains 'priced for disappointment'.

BHP currently trades on a price-to-earnings multiple of around 9.4 times, while the price to cash flow multiple is around 7.2 times. Profitability remains exceptionally high with return on equity expected to exceed 40 percent.

But what the hell do I know, I'm just a dumb value investor.

al
 
annalivia said:
The most compelling reason for investing in BHP remains the attractive valuation. Given the general overvaluation of the market at this point, BHP remains a compelling opportunity. Unlike many stocks that are 'priced for perfection', BHP remains 'priced for disappointment'.

BHP currently trades on a price-to-earnings multiple of around 9.4 times, while the price to cash flow multiple is around 7.2 times. Profitability remains exceptionally high with return on equity expected to exceed 40 percent.

But what the hell do I know, I'm just a dumb value investor.

al
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If you are truly a value investor then you know that price and value are independent of each other. You also know one of the inputs in the p/e ratio is price, how then can any measure that uses price as an input be an indicator of value? Answer, it can't. ROE's are what's important, whilst BHP is on track to post ROE of over 40% for 2 years running now you'd have to overly optimistic to think it could continue. 10 year average ROE currently stands at around 20% - still good but does it represent good value?

Personally I think the stock will keep running on the strength of the 1H07 result. Going forward what is the upsdie and downside risk to earnings? Upside: Further increases in commodity prices? Doubtful, increased production? Too far off to have any short term impact on earnings. So we are left with capital management initiatives. Downside: falls in commodity prices that can happen suddenly and have immediate impact on earnings, margins and returns on capital. The Downside is far more frightening than the upside is exciting IMHO.
 
annalivia said:
The most compelling reason for investing in BHP remains the attractive valuation. Given the general overvaluation of the market at this point, BHP remains a compelling opportunity. Unlike many stocks that are 'priced for perfection', BHP remains 'priced for disappointment'.

BHP currently trades on a price-to-earnings multiple of around 9.4 times, while the price to cash flow multiple is around 7.2 times. Profitability remains exceptionally high with return on equity expected to exceed 40 percent.

But what the hell do I know, I'm just a dumb value investor.

al
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Dear annalivia plurabelle, so as a value investor is it as low as it gets in this cycle, I normally pile in to bhp in crashes but the Australian article on cessation of dual listing today sounds very bullish. any comments??

Garpal
 
ducati916 said:
This really is the underlying problem, BSD thought FORD = F and you think I said $8 = the value after book depreciation.

I actually said nothing of the sort.
If you wish to *quote* me, at least try to be accurate.

As to LIFO/FIFO, as stated, I am indifferent to your acceptance or understanding.

jog on
d998
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No Chief - I thought the FORD you were losing money on was FOMOCO and I was wrong in that assumption.

By the way FORD is a dog too.

You still are yet to show us how accounting treatments effect cashflow. And unlike me, are unable to accept your obvious MISTAKE.

We don't care whether you are indifferent to our absolute disagreement, with your MISTAKE, we just wan't you to accept that LIFO/FIFO policy changes DO NOT effect cashflow.

Then again, you can keep losing money making dumb mistakes...
 
http://www.abc.net.au/news/newsitems/200702/s1846004.htm APEC meeting discusses future of mining
Asia Pacific Economic Cooperation (APEC) forum delegates have begun a week of meetings in Perth to discuss the mining industry. The Ministers Responsible for Mining meeting brings together more than 350 delegates from 19 of the 21 member economies of APEC, including Australia, the United States, China and Japan.

Also attending the meeting are executives from some of the world's major mining companies, such as BHP Billiton, Rio Tinto, Alcoa and Barrick Gold. Federal Industry, Tourism and Resources Minister Ian Macfarlane says economic and environmental issues in the mining industry will be key points of discussion at this week's meeting.

The delegates will spend the week consulting with executives from some of the world's major mining companies before releasing a communique outlining a set of non-binding policies governing mining practice. Mr Macfarlane says the meeting is crucial to maintaining the growth of the region's resources sector. "Australia wants to see the economies of APEC develop," he said. etc
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might cause a blip on the graph - up ? or down i guess?
 
I don't think anyone can dispute that BHP has done well over the last few weeks albeit at a swifter pace than could have reasonably been anticipated.

I am the first to admit that BHP has been a bit of a dog throughout 06, but certainly was of the opinion it was an accumalate on weakness, especially in recent months. Simplistic....maybe, but it wasn't rocket science that their half yearly was going to be a bumper one.

Hopefully momentum can take them into the mid $29 range at which point I will bump most of my short term holdings, the funds were significant and wouldnt mind spreading them over a few mid tier oilers (BPT and ROC) and some others at today's prices :) .

Its been a bit dissapointing to read posters on the thread bagging purchasers of BHP on weakness. I know in my case I have had a large sum of funds in them recently and its hard to maintain a positive vibe with such dribble being spun out about incorrect fundamentals.

So to all that enjoyed picking BHP's bum recently, well done its not often you get a 15 odd percent return on a blue chip in a month. :D
 
dhukka said:
If you are truly a value investor then you know that price and value are independent of each other. You also know one of the inputs in the p/e ratio is price, how then can any measure that uses price as an input be an indicator of value? Answer, it can't. ROE's are what's important, whilst BHP is on track to post ROE of over 40% for 2 years running now you'd have to overly optimistic to think it could continue. 10 year average ROE currently stands at around 20% - still good but does it represent good value?

Personally I think the stock will keep running on the strength of the 1H07 result. Going forward what is the upsdie and downside risk to earnings? Upside: Further increases in commodity prices? Doubtful, increased production? Too far off to have any short term impact on earnings. So we are left with capital management initiatives. Downside: falls in commodity prices that can happen suddenly and have immediate impact on earnings, margins and returns on capital. The Downside is far more frightening than the upside is exciting IMHO.
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dhukka,

I agree ROE is what is important.
The gloss has come off the big diversified miners over the past 12 months or so, as investors have focussed on cost blowouts and projects not completed on schedule. Ironically, this is a reason to remain bullish on commodity prices remaining strong. Put simply, higher costs for just about everything mean sustained higher commodity prices are required to provide incentive to go ahead with new projects.
With the outlook for commodity prices remaining strong, BHP's huge cash flows will go towards expanding capacity in order to increase future production. At some point, this will temper the commodity price rise, but I certainly do not believe it will result in sustained price falls, as many are predicting.
Although new supply is coming on stream over the next few years, the response has been slow. Companies like BHP not only need to dig resources out of the ground, they need to move them to ports for export. Much of the supply constraints are due to lack of capacity and adequate infrastructure at ports and railways. So not only does mining capacity need investment, infrastructure capacity is required too.
While volatility in oil and copper have spooked some investors over the earlier part of this year, BHP's operating earnings are derived from iron ore and coal, whose prices are contractually set each year. Iron ore prices will rise by 9 percent from April this year while coal prices are expected to decline from last years record highs.
China's and indeed much of the emerging world's industrialisation has just started. Even though there will be times when these economies experience growing pains, BHP will be a long term beneficiary of their growth, and therefore I think can maintain a high ROE for many years to come.

annalivia
 
According to my Broker, Times Newspaper in London is reporting BHP & RIO are about to bid for Alcoa...........It's associate here Alumina up over 6% this morning.

Anyone else heard about this?

MB
 
BSD said:
No Chief - I thought the FORD you were losing money on was FOMOCO and I was wrong in that assumption.

By the way FORD is a dog too.

You still are yet to show us how accounting treatments effect cashflow. And unlike me, are unable to accept your obvious MISTAKE.

We don't care whether you are indifferent to our absolute disagreement, with your MISTAKE, we just wan't you to accept that LIFO/FIFO policy changes DO NOT effect cashflow.

Then again, you can keep losing money making dumb mistakes...
Click to expand...

Incorrect.
It would seem that you need actually to resort to lies.
The evidence;

Ducati prefers the obvious superior 'value' available in FORD

http://www.bloomberg.com/apps/news?pid=20601087&sid=a.peELHwidUY&refer=home

Going well it appears!
Click to expand...

As regards the LIFO/FIFO.
The information and explanations have already been posted.
No need to repeat myself.
If you couldn't understand it the first time, why would a second or third time be any different?

jog on
d998
 
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