FMG - Fortescue Ltd

[over9k]

Iron ore's 25% off peak, FMG's 24% off peak, it's a pretty strong correlation.

Question is, what's driving the spot price drop? My gut says china.

 

[divs4ever]

Probably because of this delta outbreak?

All bets were off with the first round of virus, there's no reason not to assume we might see the same thing with this new variant.

Everyone are bricking it for a reason.

after last year's div. events , one should expect ANYTHING

i had divs trimmed AFTER the declaration date , i had divs. withheld /suspended AFTER the declaration date , or withheld /suspended AFTER the ex-div. date including one company that changed it's mind ON the div. payment date ( to withhold the div. )

( IMO ) there is no reason to believe extraordinary can't happen again this year

good luck trying to budget using strictly div. income in the last two years

BTW that is NOT to say some of those decisions were not wise and prudent .. but if i didn't have a disability pension to fall back on ( and the healthcare card ) life might have been unpleasant .

 

[divs4ever]

Iron ore's 25% off peak, FMG's 24% off peak, it's a pretty strong correlation.

Question is, what's driving the spot price drop? My gut says china.

don't just watch the Iron price , the $Aus is sliding and shipping costs are probably rising

 

[Value Collector]

Question is, what's driving the spot price drop? My gut says china.

A couple of things, firstly Iron Ore was never going to stay at all time highs.

But the drop has been pretty hard and fast, which I would put down to the compounded effect of the moves China has made to reduce price, the lock downs in China, and as I said before the scattering of the speculators.

 

[over9k]

I swear the news is reading my posts some days.

 

[basilio]

It will be interesting to see if Twiggy starts buying more shares with the ongoing fall in prices. And of course FMG itself has always stated they would buy shares onmarket if it made financial sense.

I suppose one interesting possibility is a late decision by FMG to reduce their % of profits payouts by a few points and thus lower the dividend as well at retaining additional capital. However if they decide to buyback a few hundred million in shares now they effectively reduce dividend cash outflow and the they still end up with the same cash situation.

I think this a unique situation ahead of a big dividend payment.

It is also interesting that RIO and BHP shares are rising ??

 

[divs4ever]

well BHP might be rising because it is cum-div. and RIO might be recovering after the dip caused by going ex-div.

but that is just guessing

 

[Gunnerguy]

FMG hammered today.
I’m still (Psychologically) long but will be sitting on some heavy losses when the price falls XD next month.
I plan to sell after XD and realise some significant capital tax losses and Ms. Gunnerguy will buy the same amount back for her portfolio.
Cumulative ‘we’ don’t ‘realise’ a loss but the Capital Loss will help my tax return later this year.
I also sold some credit option spreads last month that will give me some net profits on the fall also.
Gunnerguy

 

[sptrawler]

BTW that is NOT to say some of those decisions were not wise and prudent .. but if i didn't have a disability pension to fall back on ( and the healthcare card ) life might have been unpleasant .

I have neither and too young for pension, so it was an unpleasant year, luckily we couldn't travel so the half couldn't book anything. If the lockdowns last for another 12 months, it would suit me fine, the div's should be back up by then.

 

[sptrawler]

It will be interesting to see if Twiggy starts buying more shares with the ongoing fall in prices. And of course FMG itself has always stated they would buy shares onmarket if it made financial sense.

I suppose one interesting possibility is a late decision by FMG to reduce their % of profits payouts by a few points and thus lower the dividend as well at retaining additional capital. However if they decide to buyback a few hundred million in shares now they effectively reduce dividend cash outflow and the they still end up with the same cash situation.

I think this a unique situation ahead of a big dividend payment.

It is also interesting that RIO and BHP shares are rising ??

I would expect Twiggy to keep diversifying, to reduce his exposure to Iron ore.
The Chinese won't want to be dependent on our ore indefinitely, especially if relations sour further, when Taiwan is occupied.

 

[Austwide]

@Gunnerguy "I plan to sell after XD"

MIN (Iron ore) held ground until ex div then dropped 5 x div amount.
Maybe more to it or maybe too many held out for the div

Watch it closely.

 

[basilio]

I would expect Twiggy to keep diversifying, to reduce his exposure to Iron ore.
The Chinese won't want to be dependent on our ore indefinitely, especially if relations sour further, when Taiwan is occupied.

Well he is madly diversifying. Fortesque Future Industries is the vehicle for creating new renewable energy projects amongst a raft of other activities. But that is already under the FMG umbrella.

The interesting question is whether he buys further into FMG with the current SP slump as he did in March this year.

 

[sptrawler]

Well he is madly diversifying. Fortesque Future Industries is the vehicle for creating new renewable energy projects amongst a raft of other activities. But that is already under the FMG umbrella.

The interesting question is whether he buys further into FMG with the current SP slump as he did in March this year.

What did he buy the last parcel at? If the price goes to that and he buys more, it would certainly indicate a floor.
You only have to look at the chart to see that anything is possible, especially with materials, that was why I said Twiggy seems to be looking to diversify.
What was FMG in 2018, 2019, 2020?

 

[basilio]

What did he buy the last parcel at?

Twiggy bought 10 million shares from March 22 to March 25, 2021. The share price went as low as 18.87 and was basically bouncing around the low $19 mark. $19-19.40. He spent $193m on shares. The announcement of the onmarket purchase was made a few days later.

FMG has certainly had a spectacular run since 2018. I think if one looks at VC's analysis of FMG's operations in the past few years you could see the stage was being set for a very profitable run as debt was retired, capital expenditure completed and ore prices increasing. The huge unexpected increase in ore price in 2020/21 has meant that SP had to jump accordingly.

It would have been unrealistic to have a $8-10 share showing dividends of $1.14 in 2019, $1.76 in 2020 and $3.50-$4.00 in 2021 unless there was a clear one off event that was not replicable ie one off sale of a massive asset.

FMG

29/03/2021

4:22:00 PM

3

Change of Director's Interest Notice (PDF 170.3 KB)

 

[sptrawler]

Twiggy bought 10 million shares from March 22 to March 25, 2021. The share price went as low as 18.87 and was basically bouncing around the low $19 mark. $19-19.40. He sent $193m on shares. The announcement of the onmarket purchase was made a few days later.

FMG

29/03/2021

4:22:00 PM

3

View attachment 129352 Change of Director's Interest Notice (PDF 170.3 KB)

So I guess we will have to see what happens, if the price goes below that, it seems to be pretty close at the moment.

 

[basilio]

Not everyone thinks FMG is good value.

Dryblower wonders whether FMG is the world's most overvalued mining company

Dryblower's Quiz: Is Fortescue Metals Group the world's most overvalued mining company, or is it a business with a sky-high share price which could easily fund expansion, perhaps into copper?

www.miningnews.net

 

[sptrawler]

Not everyone thinks FMG is good value.

Dryblower wonders whether FMG is the world's most overvalued mining company

Dryblower's Quiz: Is Fortescue Metals Group the world's most overvalued mining company, or is it a business with a sky-high share price which could easily fund expansion, perhaps into copper?

www.miningnews.net

I've never looked into them much, but its run up has been very dramatic, as has the run up in iron ore prices. As I've said before I think Twiggy is doing the right thing diversifying, but it will take some time for that to gain traction and break the link between share price and iron ore price, they are no Wesfarmers yet IMO.
By the way that article is a year old, which is interesting.

I don't hold.

 

[dat111]

• Fortescue Metals (OTCQX:FSUMF +1.9%) and China's Tsingshan Holding could invest billions of dollars to build an industrial area for metal smelting on Borneo island, according to Indonesia's minister of maritime affairs.
• Fortescue could invest $12B and Tsingshan has the "potential" to add $30B, the minister says.
• "Total investment will be $100B, including the dam, and it will be completed in 10 years," the minister says, adding that groundbreaking is planned for October and smelting of iron, nickel and copper ores could start as early as 2023.
• Indonesia has big plans to start processing its ample supply of nickel laterite ore used in lithium batteries and eventually become a global hub for producing and exporting electric vehicles.
• Following a spectacular ~25% drop in value over the past month, iron ore futures in Singapore rebounded as much as 10% today.

 

[divs4ever]

wowee

i hold ATM and FMG there is a tiny chance i am a double winner if this goes through

cheers

 

[sptrawler]

• Fortescue Metals (OTCQX:FSUMF +1.9%) and China's Tsingshan Holding could invest billions of dollars to build an industrial area for metal smelting on Borneo island, according to Indonesia's minister of maritime affairs.
• Fortescue could invest $12B and Tsingshan has the "potential" to add $30B, the minister says.
• "Total investment will be $100B, including the dam, and it will be completed in 10 years," the minister says, adding that groundbreaking is planned for October and smelting of iron, nickel and copper ores could start as early as 2023.
• Indonesia has big plans to start processing its ample supply of nickel laterite ore used in lithium batteries and eventually become a global hub for producing and exporting electric vehicles.
• Following a spectacular ~25% drop in value over the past month, iron ore futures in Singapore rebounded as much as 10% today.

It will be interesting to see how "Green" that will be.