FMG - Fortescue Ltd

[Knobby22]

Yes, if the iron ore price can hold up for a while then the company will be in an amazing position.

 

[Toyota Lexcen]

Well done, good selection

Do you think they should offer better dividend? Would that impact share price appreciation?

 

[Value Collector]

Yes, if the iron ore price can hold up for a while then the company will be in an amazing position.

even at $50 per done their position is good

Well done, good selection

Do you think they should offer better dividend? Would that impact share price appreciation?

Dividends make share prices go down, (well grow less strongly over time than they would if the cash was retained and invested well)

But, the company has stated they plan to pay out between 30% and 40% of earnings, so yes dividends will rise.

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if you had a Jar of coins, and you knew that there was $100 in it, what would be the value of the jar?

$100 right

but if the owner of the Jar took out $5 (e.g. a dividend) and then tried to sell it, how much is it worth?

$95 is the answer.

if the money in the jar is earning 25% interest, its better to leave it in the Jar, that will make the value of the jar grow over time, as the coin build up.

if each 6 months you pay out the 25% interest, the value of the jar will not grow.

 

[adds4]

Long term, fmg is a no brainier.

Dividends aren t going to be really high, more likely be 40% of profit. Its what fmg will do with the other 60% that really counts. Debt should be paid off in 2 years, and firetale replacement mine will only be 3 months of cashflow.

Obviously for fmg to grow its going to have to buy some other assets? Maybe copper, zinc, gold and the smokey could be oil and gas - woodside maybe? take a stake in, and take over years down the track? I like ozl for copper too

 

[Value Collector]

Obviously for fmg to grow its going to have to buy some other assets? Maybe copper, zinc, gold and the smokey could be oil and gas - woodside maybe? take a stake in, and take over years down the track? I like ozl for copper too

Not really (I mean they probably will), but they could just focus on their Pilbara Iron ore tenements, there is enough Ore there to keep them busy for 100 years.

it would be a great investment if they did nothing but run the Iron ore business, clear debt, pay dividends and buy back stock.

 

[Younga]

I agree with you. I think it's a well-run company. With the price of iron ore, I expect the profit for the next half year to be pretty tidy. I read the company has had some barges built for it to save money on transportation. What next?

 

[notting]

Iron ore futures in China soared 8 per cent to a three-year peak overnight.
Yet FMG hits short term resistance at 6.40 and then turns pretty hard.
Top in place for a while one suspects

 

[Value Collector]

Is your price target still $7 VC?

There you go Bud,

We just hit $7,

We will probably fluctuate, but I think we still have a lot higher to go over the next 12 months.

 

[joeno]

Fortescue is getting battered Quite concerned with my disproportionately high holdings in this stock

 

[Value Collector]

Fortescue is getting battered Quite concerned with my disproportionately high holdings in this stock

What is your concern?

 

[PeterJ]

Fortescue is getting battered Quite concerned with my disproportionately high holdings in this stock

no stock can keep going up exponentially,
it must retrace at some stage
my simple chart...and
why i use stops
Peter

 

[dat111]

All,

I have been a holder of FMG for about 13 years now and have added to my position many times over the years...especially when it dipped....unfortunately, some of those dips were still higher than todays price. My hope has always been that it becomes are $20 stock with a nice yield. I have been reading this Forum since about page 40...
Do you think this stock will make it to this valuation in the next 13 years?
Unfortunately in the US it seems the government is controlling more and more of what happens...is it the same in Australia? If so, is Australia's current government and media pro business?

Thanks for your response...I appreciate others perspectives...

 

[tinhat]

All,

I have been a holder of FMG for about 13 years now and have added to my position many times over the years...especially when it dipped....unfortunately, some of those dips were still higher than todays price. My hope has always been that it becomes are $20 stock with a nice yield. I have been reading this Forum since about page 40...
Do you think this stock will make it to this valuation in the next 13 years?
Unfortunately in the US it seems the government is controlling more and more of what happens...is it the same in Australia? If so, is Australia's current government and media pro business?

Thanks for your response...I appreciate others perspectives...

Hi Dat. I don't hold FMG and I don't recall ever having held it. I'm having a rough punt to say that the underlying commodity is probably more resonant to a 30 year cycle rather than a 13 year cycle.

 

[Value Collector]

All,

I have been a holder of FMG for about 13 years now and have added to my position many times over the years...especially when it dipped....unfortunately, some of those dips were still higher than todays price. My hope has always been that it becomes are $20 stock with a nice yield. I have been reading this Forum since about page 40...
Do you think this stock will make it to this valuation in the next 13 years?
Unfortunately in the US it seems the government is controlling more and more of what happens...is it the same in Australia? If so, is Australia's current government and media pro business?

Thanks for your response...I appreciate others perspectives...

I don't know about $20, But I am pretty confident it will be over $10, probably well over $10.

A PE of 12.5 doesn't seem crazy to me, and this would have it over $10.

It's generating equity quite rapidly, clearing down debt etc, as this build up of value continues if we see a high quality diversification investment that grows earnings over time we could probably get to $20.

Also if over time the Iron ore market stabilises around this level or higher, and we have a few years good profits at FMG, a higher PE in the market along with a few buybacks could push the price towards $20.

But if it were $10 in 5 years, and there were good dividends along the way, that would be a great investment at this level.

 

[Value Collector]

FMG announced a record dividend today.

25 cents final dividend (fully franked), bringing it to 45cents for the full year.

Including the franking credit, this makes it over 10% dividend based on the current share price, 25% if you got in under $2.

Things are looking pretty good.

 

[McLovin]

Well done on that VC. You certainly had conviction 18 months ago when most thought FMG was dead.

The cost reduction is pretty impressive, even with the decline of the AUD.

 

[qldfrog]

FMG announced a record dividend today.

25 cents final dividend (fully franked), bringing it to 45cents for the full year.

Including the franking credit, this makes it over 10% dividend based on the current share price, 25% if you got in under $2.

Things are looking pretty good.

True, I would genuinely never have thought taking abysmal debt level at the time to mine the most common mineral on earth with a unique customer could ever be successfull: well done/ good bet VC.
Nice win

 

[notting]

Looks like FMG it's going to test 4.60 again.
With it's lower grade IO and weakness in the Chinese market, as the Chinese try to concentrate more on higher grades, to stave off pollution, FMG could be a bit volatile for the short to medium term. IO is now in a bear market again.
So lucky and good FMG has deleveraged!
Would be awesome if FMG could keep that dividend in tact and don't go buying anything stupid.!
Now that Xi has full control of China, will be interesting if he starts to cut into overbuilding. That could be a bit scary for fmg.

 

[notting]

Not looking too rosy.
My worst fear, if I were still long on FMG, would be that the the Chinese Dictatorship now really slows down the over construction and tries to make the swing to consumer driven model.
With that there is also the pollution problem which the dictators are feeling the pinch on because pollution is killing babies and people more and more.

So the dictators are curbing the factories and looking to rely on the high quality IO. Given the amount Vale, BHP and RIO alone have to supply of that, what's left for FMG may not be that much. Exit Nev a timely jump?!.

China's central government has ordered regions near the capital to shut 44,000 coal-fired boilers that provide steam and energy for factories, including steel rolling mills, ceramics and chemical manufacturers, and convert or replace them with gas-fired boilers or switch to electricity by the end of October.

http://mobile.reuters.com/article/amp/idUSKBN1CZ0K7

 

[notting]

Not looking too rosy.
My worst fear, if I were still long on FMG, would be that the the Chinese Dictatorship now really slows down the over construction and tries to make the swing to consumer driven model.
With that there is also the pollution problem which the dictators are feeling the pinch on because pollution is killing babies and people more and more.

So the dictators are curbing the factories and looking to rely on the high quality IO. Given the amount Vale, BHP and RIO alone have to supply of that, what's left for FMG may not be that much. Exit Nev a timely jump?!.



http://mobile.reuters.com/article/amp/idUSKBN1CZ0K7

Further, the significant cost savings FMG has achieved over the last few years are largly due to scale, it's not a pound for pound thing. There for if FMG has to cut back some productiom or alot due to waning demand from China, its only customer, for its lower grade IO, production costs will rise sharply as they sell less.