FMG - Fortescue Ltd

[basilio]

There's probably some short term money to be made if you're brave, but you would have to be brave.

Very courageous indeed ..
Perhaps we should wait until the US settles it's current debt ceiling issues ? Otherwise the US is defaulting on it's bonds in a few weeks.

 

[Sharkman]

Now, who's brave enough to buy on the bounce...

maybe not buying outright, but i'm getting very tempted by something like a sep 30 $15.50 - jan '22 $19 diagonal call spread today, the market is suggesting that can be done at zero cost or even a small (eg. 5c) credit if the MMs give a decent fill at the mids. there is significant skew here (near dated ATM selling at 60 vol, jan '22 ~25 delta selling at 42 vol), it's nowhere near as steep as the skews seen during the full blown panic mid last year, but significant nonetheless.

at worst it's a $3.50 max loss, but unless it shoots up in almost a straight line over the next 8 days and keeps going up thereafter, that max loss won't eventuate as near dated ATM contracts can continue to be sold (probably still at elevated vol) against the jan '22 calls to chip away at any loss taken on assignment of the front leg by collecting decay. whilst if the weeklies expire OTM, that far leg becomes a free punt on the house for a jan recovery.

 

[Sharkman]

sep 30 $15.50 - jan '22 $19 diagonal call spread

tried to put this trade on with the underlying around 15.50, mid was around 4-5c (credit) at the time but MMs wouldn't bite even when i dropped to 1c, so i took the order off. have to draw the line somewhere and with this sort of strategy i find keeping it slightly in credit (however small) is a useful psychological aid in managing the position, so i didn't feel like giving in to the MMs and crossing even more of the spread. once it pulled back slightly to below 15.40 zero cost was no longer possible. looks like the MMs are keen to sell 1 week gamma at elevated vols but not so keen to buy at the same vol.

 

[over9k]

Very courageous indeed ..
Perhaps we should wait until the US settles it's current debt ceiling issues ? Otherwise the US is defaulting on it's bonds in a few weeks.

0% probability

 

[over9k]

maybe not buying outright, but i'm getting very tempted by something like a sep 30 $15.50 - jan '22 $19 diagonal call spread today, the market is suggesting that can be done at zero cost or even a small (eg. 5c) credit if the MMs give a decent fill at the mids. there is significant skew here (near dated ATM selling at 60 vol, jan '22 ~25 delta selling at 42 vol), it's nowhere near as steep as the skews seen during the full blown panic mid last year, but significant nonetheless.

at worst it's a $3.50 max loss, but unless it shoots up in almost a straight line over the next 8 days and keeps going up thereafter, that max loss won't eventuate as near dated ATM contracts can continue to be sold (probably still at elevated vol) against the jan '22 calls to chip away at any loss taken on assignment of the front leg by collecting decay. whilst if the weeklies expire OTM, that far leg becomes a free punt on the house for a jan recovery.

I've been thinking this too. Some kind of degen call purchase and just see. I haven't even looked at the option chain yet though so it's not like I've thought hard.

 

[divs4ever]

now one POSSIBILITY is a stalemate that would force a 'government shutdown ' ( remember they have done them before ) and use that as a distraction to retrench all those vaccine hesitant government employees ( both sides are in favour of the vaccine but one side pretends it is pro-choice , but both are indebted to big pharma )

NORMALLY a shut-down would be suicidal ahead of the mid-term elections , but after 2020 it seems any election can be rigged no matter how outrageously , so the incumbents probably feel immortal

so what if the US defaults anyone with exposure to their bonds , has to be uneducated , or too greedy for their own good ( and even dumber if you leveraged them 4 or 5 times over )

IMO the main danger with FMG is that Twiggy will judge it prudent to delay expenditure in the new projects , disappointing the ESG folks

( but heck i originally planned to wait for $8 , the worst that can happen is i look impatient )

 

[over9k]

And markets have now screamed in rebound (so the bailout package has worked).

Was anyone brave enough to buy yesterday? I sold ~30% last week, have held right through since (so didn't sell in the dip but didn't buy either).

 

[over9k]

The dow pulled hard tonight but there was a big selloff into the close. This suggests we've seen the bounce we're going to see for now.

 

[basilio]

There was an announcement re. 4 new senior appointments. It reinforced the change in FMG's direction from being a pure iron ore play to a renewable energy/ green iron ore company. They certainly bring a new skill set to the company.

A separate announcement noted that Elizabeth Gaines sold 640 k ($9.4 m) of shares to fund her tax bill. As CEO of FMG I thought that was a bit interesting.

Change of Director's Interest Notice

Executive Appointments

 

[Value Collector]

There was an announcement re. 4 new senior appointments. It reinforced the change in FMG's direction from being a pure iron ore play to a renewable energy/ green iron ore company. They certainly bring a new skill set to the company.

A separate announcement noted that Elizabeth Gaines sold 640 k ($9.4 m) of shares to fund her tax bill. As CEO of FMG I thought that was a bit interesting.

Change of Director's Interest Notice

Executive Appointments

Elizabeth’s sale is just the performance rights that recently vested, when you earn an income like her, and the government wants you to hand 50% of it over in tax, I guess you need to find the money some where.

 

[joeno]

There was an announcement re. 4 new senior appointments. It reinforced the change in FMG's direction from being a pure iron ore play to a renewable energy/ green iron ore company. They certainly bring a new skill set to the company.

It's the right call to make. All great companies adapt with the times and are able to innovate and diversify their products.

 

[tech/a]

In my view the Cat is dead.
Falls below $14 are now highly likely.

 

[notting]

FMG is fully dependent on China.
Evergrande is a huge bust.
I guess we should see what happens to IO exports after the China housing collapse before buying.

 

[againsthegrain]

I have a order at 14.10 maybe get lucky

 

[qldfrog]

I have a order at 14.10 maybe get lucky

Hum that's daring.a bit high.will check on friday

 

[over9k]

Evergrande is up premarket. Looks like it's going to bounce (currently 3 mins from china open).

Still have the energy crunch to worry about though.

 

[over9k]

Yeah the PBOC has just pumped another couple of dozen billion yuan into OMO. Evergrande's bounced:

However, chinese markets are way down on account of the energy crunch.

Here's @tech/a 's previous prediction coming to pass:

So uh, yeah, I'm not buying.

 

[basilio]

A few thoughts about FMG
1) I don't think the longer term price of iron ore will fall below $100 US. I raed an analysis which pointed out that China has it's own relatively poor quality iron ore to mine which it does and will continue to do so . However the break even cost of this ore is the $100 mark so if the offshore iron is much below this price they would be subsidising the local mines even further

2) The steel industry is making good coin. So it seems they can pass the price on and still be profitable. Of course the issues of local steel demand are in question. How much goes into building ? What about car production ? Or export ?

3) FMG is quickly diversifying into massive renewable energy projects. These will further improve the value of their iron ore production and conceivably add a green steel component to their bow. In any case given the engineering skills, available capital and demand/need for massive renewable energy sources I think they will show some good returns

I don't believe the last 12 months of iron ore prices are going to be replicated. But if the price holds at approx $100 US they will still do very well.

 

[basilio]

This analysis of the future of iron ores price is a long story. I have quoted the relevant rationale of the $100 a ton price China will accept .

..the state has continued to support domestic production of mostly low-grade ore bodies that require extensive beneficiation to bring the concentrate up to a grade that is useful in steel mills.

The specific numbers do not matter overly much, as there is two-way battle axe traffic in this present-day Clash of the Titans, but most analysts, of the long lunch era, would say: $100.

It is a round number, a good number, and one to hang your hat on. There is no point wasting valuable nosh time arguing the fine detail of a number whose average is around $100.

China probably needs iron ore prices at or above $100 USD/tonne to make the great bulk of their marginal grade industry sustainable. Otherwise, they are simply paying away in a massive subsidy to keep the industry alive, with little hope of tempering Australian dominance.

Where's iron ore headed from here?

Here we are once more in the teeth of the great "super-cycle" debate as iron ore probes daily new lows in the reach for a China-Crisis clearing price. This is my first Livewire post, representing my firm Jevons Global, so I will use this opportunity to frame my contribution to...

www.livewiremarkets.com

 

[notting]

This analysis of the future of iron ores price is a long story. I have quoted the relevant rationale of the $100 a ton price China will accept .

..the state has continued to support domestic production of mostly low-grade ore bodies that require extensive beneficiation to bring the concentrate up to a grade that is useful in steel mills.

The specific numbers do not matter overly much, as there is two-way battle axe traffic in this present-day Clash of the Titans, but most analysts, of the long lunch era, would say: $100.

It is a round number, a good number, and one to hang your hat on. There is no point wasting valuable nosh time arguing the fine detail of a number whose average is around $100.

China probably needs iron ore prices at or above $100 USD/tonne to make the great bulk of their marginal grade industry sustainable. Otherwise, they are simply paying away in a massive subsidy to keep the industry alive, with little hope of tempering Australian dominance.

Where's iron ore headed from here?

Here we are once more in the teeth of the great "super-cycle" debate as iron ore probes daily new lows in the reach for a China-Crisis clearing price. This is my first Livewire post, representing my firm Jevons Global, so I will use this opportunity to frame my contribution to...

www.livewiremarkets.com

WTF are you talking about. China imports it's IO and wants lower prices.