BHP - BHP Group

You must have big nuts to short that thing.

Why not short telstra, or a bank, or anything else?......................

The Once-ler said:

You must have big nuts to short that thing.

Why not short telstra, or a bank, or anything else?......................

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I agree it is a big call but I am like hacheln_mice I think in the short term BHP might be a good short. I actually short it yesterday when it was trading at 44.95 as $45 is strong resistance point. It went down to $44.55 at closure so at the moment my short is doing well also commodities did not do too well overnight and the US stockmarket did not move much either so I am hoping for some profit taking at the beginning of next week which would allow me to sell then my short.
Don't get me wrong I love BHP and I think it will go higher and higher but at the moment it has run very hard so I think it might go down a bit in the short term.
The mini that I mentioned before is a highly leveraged put so if well play it can deliver very good short term return.
Also it gives some kind of insurance if the market goes down.

Does anyone know how BHP performed overnight in London ?

Fab said:

Does anyone know how BHP performed overnight in London ?

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BHP was up 1.45% in London.

Good luck with it anyway.

Where the hell is Ducati..?? I need a good belly laugh.

hacheln_mice said:

Vishalt, you've mistaken what I've said about the takeover. I think there is ZERO risk of BHP actually being taken over by anyone.

Mods, please delete the double post above.

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Rofl okay, fight the trend and go for your life and short it!

Even the mightiest can fall to predators (hello Time Warner + AOL).

By BHP hitting new record high, I guess the new boss coming in is a positive step which people are backing then!
I didn't know much about it so im glad its positive start.

barnz2k said:

By BHP hitting new record high, I guess the new boss coming in is a positive step which people are backing then!
I didn't know much about it so im glad its positive start.

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BHP opens this morning up +$1.31 +2.94%

BHP $45.81 +$1.31 +2.94% with high of $45.87 $45.79 2,600,095 shares $117,962,374 @ 02-Oct 10:01:03

vishalt said:

Rofl okay, fight the trend and go for your life and short it!

Even the mightiest can fall to predators (hello Time Warner + AOL).

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The trend has been to trade roughly within the channels, so I won't necessarily be fighting the trend.

Chinese savings tipped for local resource stocks

John Garnaut Asia Economics Correspondent in Beijing
October 4, 2007
SMH

SOME of China's $7.3 trillion in private and official savings could soon be channelled to the Australian sharemarket, analysts predict. BHP Billiton and Rio Tinto are tipped to be prime targets for China's new $US200 billion sovereign wealth fund, while regulators are opening paths for Chinese private investors to punt on overseas sharemarkets.

Chinese investors have accumulated 38 trillion yuan ($5.7 trillion) in commercial bank deposits while the People's Bank of China, the central bank, holds another 10.5 trillion yuan ($1.6 trillion) in foreign exchange reserves.

Almost all of it is locked up in Chinese banks and US Treasuries, earning low or negative real returns. Chinese authorities are looking to loosen outward investment restrictions in order to reduce pressure on inflation, asset prices and the pegged renminbi currency.

On Saturday the Government launched the China Investment Corporation, with an initial mandate to increase returns on $US200 billion in foreign exchange holdings.

Vincent Chan, a strategist for Credit Suisse in Hong Kong, said the fund would be seeking 5 to 10 per cent stakes in resources companies that are levered to China's industrial boom, especially those in "friendly" countries where political backlashes are unlikely.

Mr Chan has put Russia's state-controlled oil and gas behemoth, Gazprom, at the top of the fund's likely shopping list, followed by BHP Billiton. Rio Tinto is at No.6.

"Having a stake in BHP and Rio Tinto are quite high on China's agenda," Mr Chan said. "There will be some paranoid voices in the process, but there is rather little that the Australian Government can do - at least openly. It's more or less all about price."

Chinese authorities have also introduced a series of pilot programs to allow individuals and institutions to invest offshore. One of them, dubbed the "through train", will allow some investors to punt on the Hong Kong sharemarket.

Hong Kong shares have risen almost 39 per cent since the idea was floated on August 20.

While the market apparently expects a flood of Chinese capital, the scheme has yet to begin and details have been obscured amid bureaucratic infighting.

Yu Yongding, an authoritative economist who stepped down from the central bank's monetary policy committee last year, recently warned Chinese officials that they could court disaster by opening outward investment channels before introducing a more flexible currency regime.

"Capital controls are China's last line of defence and cannot be eased until China's financial reforms are complete," he told the Herald. "Growth is cyclical and a sudden change in China's situation could prompt massive capital flight. If there are no restrictions to ease the blow at that point, the effects on China's economy will be disastrous."

But Singapore stocks have also been buoyed by rumours China would open investment channels there. Some analysts expect Chinese individuals and institutions will soon be authorised to spread as far as Australia.
Top of the list

* Gazprom

* BHP

* HSBC

* Toyota

* CVRD

* Rio Tinto

* Samsung Electronics

* Rosneft (Russia oil and gas)

* Lukoil (Russia oil and gas)

* POSCO (Korean steel)

Finally BHP takes 2 days worth of a breather.

Good opportunity to buy IMO (I certainly did) - especially with the Chinese poised to channel some of those trillion dollar funds into our assets.

It'd be pretty cool if they decided to just say "Hey, lets just takeover BHP!" lol.

Looking at the P/E (commsec research)

BHP P/E ratio BHP 15.85 All ords 16.63 Sector 15.58 it looks like BHP (and Rio is similar) are fairly in line with value.

But if you look at the US & British shares of the company, they've returned 120%, 100% respectively, and we've done 80%.

So I'm going to say speculatively that BHP still has a fair way to go, and with sustained strong earnings, high metal prices, project upgrades and Kloppers at the helm I'm confident that BHP can punch through $50 in the medium-term and then go on from there.

What also looks interesting is the Canadian big cap (Teck Cominco) www.teckcominco.com - which is another diversified miner with a P/E of just 10! Anyone have any thoughts on that? I'd trade it but I'm not satisfied with CMC's margin and the AUD/CAD rates.

vishalt said:

But if you look at the US & British shares of the company, they've returned 120%, 100% respectively, and we've done 80%.

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I've got no doubt BHP has much further to go in the long term, especially with the collapsing US $ and countries with plenty of $ to throw around.

Another reason why I think BHP has made an intermediate top. Either it trades sideways for awhile or pulls back a bit.

hacheln_mice said:

Another reason why I think BHP has made an intermediate top. Either it trades sideways for awhile or pulls back a bit.

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I think BHP topped for the short term at $46. My hope is that it will drop to $40 -$42 for the short term as I have bought a put on BHP.

Extract from MiningNews.net

************

Base metals lead stocks down

Colin Jacoby
Tuesday, 9 October 2007

RESOURCE stocks had a lacklustre day on the bourse after all base metal prices dropped overnight, while UBS has upped its target prices for the mining majors.

Both BHP Billiton and Rio Tinto ended the day in the red with BHP closing down 21c at $44.48, while Rio closed down $2.22 at $109.10.

UBS has increased its target prices for BHP to $52 from $45 and Rio from $128 from $118 on higher iron ore price forecasts.

As a result, analysts at UBS have lifted earnings forecasts for the mining majors with BHP's earnings tipped to increase 6% in 2008 and 10% in 2009, while Rio's tipped to increase 10% in 2008 and 12% in 2009.

Some interesting comments

Cheers

BT

Merrills currently has a Neutral rating on BHP (and thus no target) and a Buy on Rio (target $120.00). But the analysts this morning have released a report which applies reverse logic - effectively estimating at what price various commodities would have to remain at - in perpetuity - to justify various valuations.

Current valuation, by Merrills' calculation, would need the following prices (all in US$) to remain for ever: copper 3.08/lb, aluminium 1.10/lb, nickel 15/lb, iron ore 55% above JPY07, hot coking coal (HCC) 90/t, thermal coal (TC) 60/t and oil 70/bbl.

A valuation of $50 for BHP and $120 for Rio would require the following prices: copper 3.10/lb, aluminium 1.12/lb, nickel 15/lb, iron ore 55% above JPY07, HCC 100/t, TC 65/t and oil 70/bbl.

A valuation of $60 for BHP and $140 for Rio would require: copper 3.60/lb, aluminium 1.12/lb, nickel 15/lb, iron ore 55%, HCC 125/t, TC 100/t and oil 100/bbl.

Clearly, in making these calculations, Merrills has tried to keep things realistically possible. However, while the prices might be possible, the capacity for them to remain in perpetuity is where things get stretched. (Not the actual infinite nature of perpetuity, as earnings tend to zero on a discounting basis once you get out into time). In actual fact Merrills is expecting commodity prices ultimately to decline from current levels.

lol merrill lynch are a bunch of hacks, they called this a bubble and said the commodities cycle ended in the mid-2005 correction and the february plunge this year and now they're suddenly neutral and buying Rio?

vishalt said:

lol merrill lynch are a bunch of hacks, they called this a bubble and said the commodities cycle ended in the mid-2005 correction and the february plunge this year and now they're suddenly neutral and buying Rio?

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Firstly Vishault, they are not my comments and I neither agree nor disagree with them, merely posted them for those that are interested. Whether or not Merills are hacks that fact of the matter is that Brokers (Macquarie is another) are beginning to re-rate the big miners, and there are people out there that heed the advice of these “hacks”.

Secondly the critical part of the post was the valuation numbers in relation to commodity prices which should be noted:

A valuation of $50 for BHP and $120 for Rio would require the following prices: copper 3.10/lb, aluminium 1.12/lb, nickel 15/lb, iron ore 55% above JPY07, HCC 100/t, TC 65/t and oil 70/bbl.

A valuation of $60 for BHP and $140 for Rio would require: copper 3.60/lb, aluminium 1.12/lb, nickel 15/lb, iron ore 55%, HCC 125/t, TC 100/t and oil 100/bbl.

Thirdly I believe that fundamentals for the likes of BHP and RIO remain intact for the Mid Term, however the run has been strong since the August correction and when you think about the weight of the XAO represented by BHP any hiccups are going to have a large effect.

BHP has been a great stock for me, however I have always traded it on a contrarian basis, I have never accurately picked bottoms and have never been fortunate enough to pick the top, I have however made a lot of money out of the stock i.e. bought $24.50 sold $44.60 + dividends + franking credits neither the top nor the bottom over the 12 month trade, and this was done using a broker sentiment index. See attachment.



Cheers


BT

Bush Trading

Was wondering where you got that sort of information from?

Rob

Those assumptions are just that.

Most analysts had sell targets of $32.00 less than 9 months ago.

Bush Trader said:

Firstly Vishault, they are not my comments and I neither agree nor disagree with them, merely posted them for those that are interested. Whether or not Merills are hacks that fact of the matter is that Brokers (Macquarie is another) are beginning to re-rate the big miners, and there are people out there that heed the advice of these “hacks”.

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I respect it here to read for others and I'm only being fair by noting what they've said in the past.

I think it's pretty embarrassing for a financial giant like them to come onto Bloomberg TV every 2nd day and say the "commodity boom is over" and the big diversifieds (BHP/Rio) are going to "deplete in value by 40% over the year" and then change their mind about it, don't you think?

Bush Trader said:

Secondly the critical part of the post was the valuation numbers in relation to commodity prices which should be noted:
A valuation of $50 for BHP and $120 for Rio would require the following prices: copper 3.10/lb, aluminium 1.12/lb, nickel 15/lb, iron ore 55% above JPY07, HCC 100/t, TC 65/t and oil 70/bbl.
A valuation of $60 for BHP and $140 for Rio would require: copper 3.60/lb, aluminium 1.12/lb, nickel 15/lb, iron ore 55%, HCC 125/t, TC 100/t and oil 100/bbl.
Thirdly I believe that fundamentals for the likes of BHP and RIO remain intact for the Mid Term, however the run has been strong since the August correction and when you think about the weight of the XAO represented by BHP any hiccups are going to have a large effect.

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Looks like BHP will sit closer to $60 next year than $50 at the present rate.
Only iron ore and oil are likely to drag out the painful ascent for those who keep trying to short it!