FMG - Fortescue Ltd

[divs4ever]

A couple of observations,
today was the biggest volume day and one day drop, in over a year


The obvious is, somebody was still buying, found it a good deal. Not to sound like a broken record but hardly many places to park money for a good % return these days. If property drops a few % with 1-2% rental returns where else do you park your stash

well i did buy on Thursday , but not Friday , and i haven't stopped placing orders yet

but another tiny facet to consider is FMG is putting growth strategies into place while some large rivals are divesting 'non-core assets '

currently i hold half the number of FMG shares as i do in BHP but that is liable to change over time ( my preferred top up price for BHP is sub $25 it has been messing around with potash for years and is apparently still years away from production )

interesting times ahead

 

[over9k]

That's ok.
Thanks for all the bad news... much obliged.?

Luckily, Dr Twiggy has been planning other things for quite some time.
I hadn't really gone looking for hydrogen stocks lately when they have been on the rise.

Are investors still looking at Fortescue as a iron miner?

I'm thinking, if markets are forward pricing, it's about time the markets start pricing in the future growth potential of the hydrogen business of FMG.

Twiggy at Boyer Lecture.
Started watching last night, will finish today.
From what I saw, it's a real eye opener, as I haven't delved into hydrogen before now.
Very much worth watching, imo.
Skip to 1:18 to avoid Ita Butttrose...



I'm going to attempt to make myself a little learned about hydrogen this weekend.
Long over due.

In thinking about the future with iron ore prices dropping, FMG, WA AND AUSTRALIA as a nation, should be getting behind this hydrogen project.
Almost rubber stamping it if you will...imo, the hydrogen prospects/ tenements applications should be fast tracked due to sovereign benefit.

The foremost and pressing concern would be incomes and jobs going ahead, but there's also the green environmental aspects, which are probably more important down the track as the world pushes to be carbon neutral.

I'm mulling a degen buy on monday so if it keeps dropping I'll be losing money with you if that makes you feel any better?

 

[tech/a]

For a technical view

No body asked---but hey.

Think we are close to a shorter term capitulation ($14-15.20)
followed by a dead cat bounce rally to the gap ( $16-17.)
Then (If price action behaves itself and the crowd remain
predictable.) To $8-10.

Impossible??

 

[qldfrog]

For a technical view

No body asked---but hey.


View attachment 130443

Think we are close to a shorter term capitulation ($14-15.20)
followed by a dead cat bounce rally to the gap ( $16-17.)
Then (If price action behaves itself and the crowd remain
predictable.) To $8-10.

Impossible??

I like your tech analysis, the extra factor is international situation
FMG is seen as a China economy proxy, and so every China heavy news will influence FMG SP as well as IO and obviously nyse up and down.
I believe as well that commodities are the last sector to boom but IO is not really a commodity, too common, it is just the cheapest way to dig dirt somewhere and ship it to a smelter.
Rarity is what should make price, higher and higher for copper nickel cobalt RE and of course PM..
My view only and i have been very wrong in the past
Fmg at $9 to $10 and i would start buying..
Remember we are also talking 2021 and so losing not far from 50% from 2000s value
$5 then is $10 now, with some lost/used resources but also some established assets and know how, infrastructure...

 

[finicky]

For a technical view

No body asked---but hey

But they already have mine

 

[tech/a]

But they already have mine

Ha

They have too and it looks pretty good to!
Great minds!

 

[over9k]

For a technical view

No body asked---but hey.


View attachment 130443

Think we are close to a shorter term capitulation ($14-15.20)
followed by a dead cat bounce rally to the gap ( $16-17.)
Then (If price action behaves itself and the crowd remain
predictable.) To $8-10.

Impossible??

I was thinking about a degen buy order at 14.01 too tech so you're music to my ears with this.

(still probably not going to do it though)

 

[tech/a]

I was thinking about a degen buy order at 14.01 too tech so you're music to my ears with this.

(still probably not going to do it though)

I personally wouldn't be fixated on attempting to purchase FMG at a perceived bargain.
Id be and am looking for continuation of winning stocks.

 

[basilio]

So tech/a. Is this your opportunity to do a huge short sell on FMG ? The charts seem to be telling the story .

-----------------------------------------------------------------------------------------
On the macro picture there are some serious issues. The Evergrande debt problem could quite conceivably cause a major financial crisis. That would precipitate a crash in Chinese demand for iron ore and the price could indeed fall to even half the current price.

At $50-60 a tonne FMG would still be profitable with minimal debt and a fully developed mine and transport structure. But i'm not sure how many other major businesses could say the same in those circumstances. So I wonder what would be the winning stocks in a time of financial and industrial meltdown?

 

[over9k]

So tech/a. Is this your opportunity to do a huge short sell on FMG ? The charts seem to be telling the story .

-----------------------------------------------------------------------------------------
On the macro picture there are some serious issues. The Evergrande debt problem could quite conceivably cause a major financial crisis. That would precipitate a crash in Chinese demand for iron ore and the price could indeed fall to even half the current price.

At $50-60 a tonne FMG would still be profitable with minimal debt and a fully developed mine and transport structure. But i'm not sure how many other major businesses could say the same in those circumstances. So I wonder what would be the winning stocks in a time of financial and industrial meltdown?

Inverse etf's and puts.

FMG might be the best of a bad bunch, but a bad bunch is still a bad bunch.

 

[divs4ever]

that bad bunch is the whole Australian economy but MIGHT be still better than most of the G7

assuming self-sufficient Russia is now excluded from the G7

 

[tech/a]

So tech/a. Is this your opportunity to do a huge short sell on FMG ? The charts seem to be telling the story .

-----------------------------------------------------------------------------------------
On the macro picture there are some serious issues. The Evergrande debt problem could quite conceivably cause a major financial crisis. That would precipitate a crash in Chinese demand for iron ore and the price could indeed fall to even half the current price.

At $50-60 a tonne FMG would still be profitable with minimal debt and a fully developed mine and transport structure. But i'm not sure how many other major businesses could say the same in those circumstances. So I wonder what would be the winning stocks in a time of financial and industrial meltdown?

That short opportunity sailed a long time ago.

 

[spratty84]

FMG was severely undervalued when it was $5, I wouldn’t compare prior share prices and prior Iron ore prices.

it’s better to work out how much profit FMG will make a various iron prices and work you valuation off that.

for example one simplistic valuation is to look at 2020. Iron Ore averaged $93 for that year (some months less, some months more), but when Iron Ore averaged $93, they were able to pay $1.76 in dividends

FMG was severely undervalued when it was $5, I wouldn’t compare prior share prices and prior Iron ore prices.

it’s better to work out how much profit FMG will make a various iron prices and work you valuation off that.

for example one simplistic valuation is to look at 2020. Iron Ore averaged $93 for that year (some months less, some months more), but when Iron Ore averaged $93, they were able to pay $1.76 in dividends that year.

Now what would the share price be if the dividend yield was 5% on that $1.76 of dividends? The answer is $35.

As you would realise, even though the last dividend by itself was $2.11 for just 6 months, FMG has not ever come close to $35 yet, this is a clear sign that the super high Iron Ore prices of 2021 were never really priced in, because the market already suspected the Iron Ore price would fall, the $93 Iron Ore price of 2020 wasn’t even really factored in.

people will always over reacted when a commodities companies product price falls, but you don’t have to let yourself get swept away with it.

It would be interesting to know what dividends they will still dish out at a price of tanked low of $50 to $60. I would like to think they would still pay out 80 percent but they do have great ambitions that will need to be funded. Firstly i like the green steel idea as it will value add to the iron ore and make a product that will be unique and should be soughted after. Secondly of course the renewables and hydrogen that will be needed to decarbonise the operations and hopefully supply of hydrogen to a potential expanding market. The main concern for me is at what stage in the future will china chop our cockles off and drastically reduce the need for our Australian iron ore.

 

[Value Collector]

It would be interesting to know what dividends they will still dish out at a price of tanked low of $50 to $60. I would like to think they would still pay out 80 percent but they do have great ambitions that will need to be funded. Firstly i like the green steel idea as it will value add to the iron ore and make a product that will be unique and should be soughted after. Secondly of course the renewables and hydrogen that will be needed to decarbonise the operations and hopefully supply of hydrogen to a potential expanding market. The main concern for me is at what stage in the future will china chop our cockles off and drastically reduce the need for our Australian iron ore.

Dividends would be around $0.69 if Iron Ore averaged $60 for 12 months.

 

[spratty84]

Dividends would be around $0.69 if Iron Ore averaged $60 for 12 months.

Cheers mate thanks for sharing your knowledge its appreciated. I have to sit down and think about my strategy, the price correction has happened a lot faster than i had anticipated a few weeks ago.

 

[over9k]

Cheers mate thanks for sharing your knowledge its appreciated. I have to sit down and think about my strategy, the price correction has happened a lot faster than i had anticipated a few weeks ago.

Yeah, the chinese government have brought a ton of regulations in cracking down on basically everything you can think of - tech companies, casino's, nuking bitcoin mining, you name it, right as the economy was reaching a tipping point.

E.g:

Question is, how much is left? There will undoubtedly be more, but how much more...


Mush of the short selling ship has already sailed IMHO. Is there still some left? Yeah, probably.

Is it worth the risk though...

 

[over9k]

Here's the china bull 3x etf vs the bear 3x etf (short position):

As you can see, the bear etf has almost exactly doubled whereas the bull etf has, on account of these being 3x etf's, thus dropped 2/3rds.


I spent a very long time wondering why on earth FMG et al hadn't nosedived along with the rest of the chinese market but I guess the crackdowns were only on coin mining, tech companies etc so it remained insulated. It needed the real estate market to go (so this is obvious contagion from evergrande) in order to tumble just like everything else already had. I made a lot of posts in another thread talking about what an absolute state china was actually in and people mostly just ridiculed me.

Anyways, FMG tumbling is easy to predict if you knew evergrande was to go, but you'd have to actually know evergrande was going to go before you knew what would happen as a result of said evergrande collapse.

 

[sptrawler]

What if China starts putting embargoes on exporting white goods and parts to specific countries, ala the U.S to North Korea, Iran etc?
Just a thought.

 

[Miner]

Here's the china bull 3x etf vs the bear 3x etf (short position):

View attachment 130456

As you can see, the bear etf has almost exactly doubled whereas the bull etf has, on account of these being 3x etf's, thus dropped 2/3rds.


I spent a very long time wondering why on earth FMG et al hadn't nosedived along with the rest of the chinese market but I guess the crackdowns were only on coin mining, tech companies etc so it remained insulated. It needed the real estate market to go (so this is obvious contagion from evergrande) in order to tumble just like everything else already had. I made a lot of posts in another thread talking about what an absolute state china was actually in and people mostly just ridiculed me.

Anyways, FMG tumbling is easy to predict if you knew evergrande was to go, but you'd have to actually know evergrande was going to go before you knew what would happen as a result of said evergrande collapse.

which one next outcome for evergrande now ?

Evergrande Group - Wikipedia

en.wikipedia.org

 

[over9k]

What if China starts putting embargoes on exporting white goods and parts to specific countries, ala the U.S to North Korea, Iran etc?
Just a thought.

Pure bluff. Their economy is on a knife-edge as it is, not to mention how much global supply chains are being undone and moved to a build-where-you-sell model and have been for 5+ years now.

If china did a saddam and took taiwan and KO'd half the world's microchip supply that would be a different story, but that really would start ww3 except it would be china vs the entire planet and they wouldn't stand a chance, not least of all because of the fact that they are massive net importers of both energy AND food.

The whole thing would be over in days.



We have been over this in two other threads now.