FMG - Fortescue Ltd

[qldfrog]

There are rules requiring all directors sales or purchases of shares be openly declared, this serves to maintain transparency for both the shareholders and the market in general. The director in question now holds 15,996 shares in FMG.

That's quite small in the scale of things

 

[Value Collector]

That is interesting. I'm wondering how that is achieved and also how many shares are in effect bought back.

I'm aware they have had provision to buy back shares but Is there any notification of how many shares have been effectively transferred through the div reinvestment program ?

I believe the way it works is that they know how many shares need to be issued, because they know who has the reinvestment plan activated, but they don’t announce the price the shares will be issued at for 9 days after ex dividend, over those nine days they purchase the shares needed on market, and then issue them at the average price paid.

 

[divs4ever]

There are rules requiring all directors sales or purchases of shares be openly declared, this serves to maintain transparency for both the shareholders and the market in general. The director in question now holds 15,996 shares in FMG.

directors are no longer 'glued to their seats '( and in some cases i wish SOME were )

there is a modern trend of board refreshes , and while they can be good on poorly performing companies , one can only hope Twiggy is recruiting more TALENT and not just 'diversity ',

so a relatively new director buying a few extra shares probably won't excite anyone but that director

BTW i am all in favour of that 'transparency ' sometimes it gives a useful hint into the company

 

[divs4ever]

I believe the way it works is that they know how many shares need to be issued, because they know who has the reinvestment plan activated, but they don’t announce the price the shares will be issued at for 9 days after ex dividend, over those nine days they purchase the shares needed on market, and then issue them at the average price paid.

there should be a notice ( already or soon ) on the DRP which SHOULD state whether the shares were issued , bought on-market , or any other way the DRP was filled ( like an off-market buy-back )

in some companies that is not a big deal , but companies where the directors own more than 20% of the company ( combined ) it can be

FMG seems to be better than most at dotting Is and crossing Ts , so let's see

 

[Value Collector]

directors are no longer 'glued to their seats '( and in some cases i wish SOME were )

there is a modern trend of board refreshes , and while they can be good on poorly performing companies , one can only hope Twiggy is recruiting more TALENT and not just 'diversity ',

so a relatively new director buying a few extra shares probably won't excite anyone but that director

BTW i am all in favour of that 'transparency ' sometimes it gives a useful hint into the company

I think the job of most directors at FMG is vote yes, or say “I resign”, when the chairmen holds 35% of the voting shares, you probably aren’t there to disagree with him, you are probably there for advice in your field eg if you are a lawyer, engineer, financier etc but not make big calls as to the direction of the ship.

 

[Value Collector]

there should be a notice ( already or soon ) on the DRP which SHOULD state whether the shares were issued , bought on-market , or any other way the DRP was filled ( like an off-market buy-back )

in some companies that is not a big deal , but companies where the directors own more than 20% of the company ( combined ) it can be

FMG seems to be better than most at dotting Is and crossing Ts , so let's see

The drp announcement states all shares will be purchased on market.

 

[divs4ever]

the board are NOT there to automatically disagree ( unless you are forced to have those pesky 'activist representatives ' on the board )

they are there to add sensible critique , of plans and visions , and help remedy interference to a smooth path in a timely manner

now of course a board full of 'agreeniks ' when the plan has all sorts of foreseeable issues is different ( and sadly common on the ASX )

but that is harder to fix especially when the 'two-strike' rule isn't as effective as it could be

PS have mixed feelings on on-market DRP buying especially in a company with solid growth plans ( it is a cheap way to increase capital reserves )

for me it depends on the company operating the DRP plan ( i do NOT automatically sign up to an active DRP , i make each decision individually )

 

[Value Collector]

PS have mixed feelings on on-market DRP buying especially in a company with solid growth plans ( it is a cheap way to increase capital reserves )

I prefer on market DRP purchases, otherwise they are technically capital raisings, which if a company required more capital I would just prefer them to pay a smaller dividend.

If I believe a company is under valued, which in FMG’s case I do think they are under valued, I would hate them to be issuing cheap shares to DRP participants at the expense of diluting me.

How ever, with the drp being on market, it has no effect on my holdings, so I am all for it, infact right now it’s very good, because the DRP is soaking up some of the shares short sellers have sold, and putting them in the hands of long term owners.

 

[divs4ever]

my holdings are normally tiny compared to the company issued share base , so only rarely does my voting power matter ( even when i had a fair slab of WOW )



it should be noted some of those Institutional holders looked at as a positive influence are the same managers that are lending out those shares for extra returns

it MIGHT be worth your time to peruse the change of holding releases to help detect which 'rent shares ' and which don't

 

[Value Collector]

my holdings are normally tiny compared to the company issued share base , so only rarely does my voting power matter ( even when i had a fair slab of WOW )



it should be noted some of those Institutional holders looked at as a positive influence are the same managers that are lending out those shares for extra returns

it MIGHT be worth your time to peruse the change of holding releases to help detect which 'rent shares ' and which don't

it’s not about voting power, it’s about diluting the earning power of the DRP/capital raising is done at a price lower than fair value.

I don’t have anything against the act of short selling, I would rent my shares to them if I could and it increased my income from my long term position, short sellers can’t really hurt long term holders in any way, they have to buy their shares back eventually, and in the mean time they may lower prices which helps longer term holders get into the stock at a cheaper price.

but saying that, I don’t mind watching the short sellers get burned when they bet against me and get it wrong and if the on market DRP helps squeeze them a bit tighter, I am all for it.

 

[divs4ever]

some companies use the cash saved by issuing the extra shares wisely , and some DON'T

so a lot of the time i do the extra thinking when deciding IF ( and how much ) i participate in the DRP

i don't particularly hate short-sellers , sometimes their activities give me an extra bonus if i am already interested in buying what they are selling short WHAT I DO HATE is a fund manager using shares held in 'trust ' to act against my wishes and interests

 

[Value Collector]

some companies use the cash saved by issuing the extra shares wisely , and some DON'T

Before raising capital by selling equity, I would rather my companies exhaust other options

1, retaining earnings (dividend policy based on estimated future capital needs)

2, using debt (within safe limits and sensible interest rates)

Only once those and other potential sources or capital are exhausted would I be ok with a capital raising, and only if the current share price used for the capital raising was above my estimate of fair value.

Also, I would want it to be an actual capital raising, not a DRP, especially not an underwritten DRP.

—————————

Ofcourse none of this applies to FMG, Because their DRP shares are purchased on market, so it’s not a capital raising.

 

[divs4ever]

you might have noticed SOME companies lack discipline , and personally i would rather have seen FMG pay a smaller div. and use the extra cash reserves wisely , i suspect there will be wild times ahead , whether they diversify from iron or not

now some companies ( especially REITs like their gearing , but need to snap up opportunities at relatively short notice )

WOW seems to get mostly fizzle for their retained divs , while spin-off SCP seems to do better with the extra cash

i guess time will tell and we will see if FMG needs to raise more cash in the next two years

 

[Value Collector]

you might have noticed SOME companies lack discipline , and personally i would rather have seen FMG pay a smaller div. and use the extra cash reserves wisely , i suspect there will be wild times ahead , whether they diversify from iron or not

now some companies ( especially REITs like their gearing , but need to snap up opportunities at relatively short notice )

WOW seems to get mostly fizzle for their retained divs , while spin-off SCP seems to do better with the extra cash

i guess time will tell and we will see if FMG needs to raise more cash in the next two years

That’s where I would have to disagree, I think FMG handing over the cash to the owners of the company actually shows huge discipline.

They retained more profits in the past and used it wisely to clear debt and fund growth, but now they have no net debt, and their growth projects are easily covered by the 20% of profits they do retain.

So handing the excess capital back to the owners is the best thing to do, and each share holder can decide whether they want to use it to diversify or not themselves.

 

[basilio]

That’s where I would have to disagree, I think FMG handing over the cash to the owners of the company actually shows huge discipline.

In theory the concept of the managers of a company handing over profits to the owners as dividends is very sound. Plenty of companies where the managers just want to burn cash on almost anything except dividends.

FMG's situation is a bit different because the biggest shareholder is the founder and Chairman who is very happy to see maximum dividends to moi. He doesn't take any salary - just dividends.

I also note Twiggy reviewed executive bonuses because the last years super profit results made them too big in his view.

Fortescue posts record profit, dividend but cuts management bonuses

Fortescue Metals Group Ltd reported its highest ever annual profit and dividend on Monday due to sky-high iron ore prices but senior management received a surprise cut to bonus payments.

www.reuters.com

 

[Value Collector]

In theory the concept of the managers of a company handing over profits to the owners as dividends is very sound. Plenty of companies where the managers just want to burn cash on almost anything except dividends.

FMG's situation is a bit different because the biggest shareholder is the founder and Chairman who is very happy to see maximum dividends to moi. He doesn't take any salary - just dividends.

I also note Twiggy reviewed executive bonuses because the last years super profit results made them too big in his view.

Fortescue posts record profit, dividend but cuts management bonuses

Fortescue Metals Group Ltd reported its highest ever annual profit and dividend on Monday due to sky-high iron ore prices but senior management received a surprise cut to bonus payments.

www.reuters.com

Yep, Andrew has charities and other business interests to invest in outside Fortescue, so as long as FMG has enough liquidity inside to keep its projects funded then there is little point keeping cash in the business bank account earning 0.5%

Many claim FMG should be spending their owners earnings on big diversification M&As, but if they pay big dividends, then the owners can diversify themselves into any assets they choose themselves.

Over the years my FMG dividends have helped me buy into Airports, electric car factories, film studios, industrial real estate, farmland, banks, smart phone makers, Themeparks and many more, so I don’t need FMG to diversify, their dividends allow me to diversify my own portfolio into exactly the industries I want.

 

[dat111]

Yep, Andrew has charities and other business interests to invest in outside Fortescue, so as long as FMG has enough liquidity inside to keep its projects funded then there is little point keeping cash in the business bank account earning 0.5%

Many claim FMG should be spending their owners earnings on big diversification M&As, but if they pay big dividends, then the owners can diversify themselves into any assets they choose themselves.

Over the years my FMG dividends have helped me buy into Airports, electric car factories, film studios, industrial real estate, farmland, banks, smart phone makers, Themeparks and many more, so I don’t need FMG to diversify, their dividends allow me to diversify my own portfolio into exactly the industries I want.

Exactly, As an investor we have a choice to reinvest in the company who paid the dividend or to use the money to buy something else...until we need the money for something else.

 

[basilio]

Excellent analysis of the iron ore industry with the current sharp falls in iron ore prices.

First, it’s important to note that BHP, Rio Tinto and FMG are businesses built to withstand a much lower iron ore price than we see now, and an impressive period of operational discipline during the past five years has left cash costs at the trio in the range of $US15 to $US20 a tonne.

As such, these miners will remain fantastically profitable at $US130 a tonne, and handily profitable at the long-term average iron ore price of $US70 a tonne.

Where their share prices should sit under those price scenarios is a different question, of course.

The D-Day looming for iron ore investors

After banking fat dividends from BHP, Rio Tinto and Fortescue, investors will need to make a call on the weaker outlook for the commodity.

www.afr.com

 

[divs4ever]

have an order in for $15 ( which i MIGHT move lower next week ) after buying some yesterday @ $17.60

and on order in for more MGX @ 44c

remember i believe the recent commodity highs ( except PMs ) have been out of cycle and the real demand boom is still a few years away

 

[againsthegrain]

have an order in for $15 ( which i MIGHT move lower next week ) after buying some yesterday @ $17.60

and on order in for more MGX @ 44c

remember i believe the recent commodity highs ( except PMs ) have been out of cycle and the real demand boom is still a few years away

Looking back I feel like my orders at 19 18 and 17 were rushed, as much as my emotion is saying buy buy now im going to wait a week or 2, 15 does seem like a great deal tho