FMG - Fortescue Ltd

[basilio]

I think there is a lot of work to be done to restore confidence in FMG. Having the SP battered the way it is, is unnerving. Its interesting that there weren't any significant support today after the overnight sell off. If any investors are seeing a "bargain" they are being swamped by sellers who are forcing the SP even lower.

I don't believe the financial bottom line will be substantially boosted in the short term through the Hydrogen and other renewable processes. However for the sake of investors confidence I think there should be some demonstrable progress. Slashing 700 jobs imv is one sort of "progress" but I wonder what effect this has had on achieving objectives and sustaining internal morale ?

 

[qldfrog]

Early july, i uncommonly bought a parcel of FMG at 22.41, expecting a quick sell and small profit on IO price.
Well, sold 2 weeks later at $21.47 as i had not much faith in the company and IO failed to rebound.. i narrowly avoided a nasty hit ..
Lessons for me: when you do not believe in a company, do not even play with it

 

[Value Collector]

I think there is a lot of work to be done to restore confidence in FMG. Having the SP battered the way it is, is unnerving. Its interesting that there weren't any significant support today after the overnight sell off. If any investors are seeing a "bargain" they are being swamped by sellers who are forcing the SP even lower.

I don't believe the financial bottom line will be substantially boosted in the short term through the Hydrogen and other renewable processes. However for the sake of investors confidence I think there should be some demonstrable progress. Slashing 700 jobs imv is one sort of "progress" but I wonder what effect this has had on achieving objectives and sustaining internal morale ?

$2 Billlion worth of stock is a lot for the market to absorb in a day, I think what we saw today was just that huge parcel of shares being gradually offloaded into the market.

 

[dat111]

J Fortescues Dividend Policy May Come Under Pressure -- Market Talk
9:23 PM ET 7/25/24 | Dow Jones

0123 GMT - Iron-ore miner Fortescue may need to borrow to shore up its dividend, reckons Macquarie. Fortescue has recently taken action on costs, including cutting 700 jobs. But Macquarie is more bearish than the market on iron-ore prices, and is notably some 11% and 13% below consensus in FY 2025 and FY 2026, respectively. As a result, Macquarie sees Fortescue's minimum 50% payout ratio coming under pressure. "To sustain the dividend policy, we believe Fortescue may need to increase gearing," Macquarie says. (david.winning@wsj.com; @dwinningWSJ)

 

[dat111]

DJ Fortescue's Guidance Suggests Lower Hematite Output -- Market Talk
9:37 PM ET 7/25/24 | Dow Jones

0137 GMT - Morgans wonders whether Fortescue's hematite production will fall in FY 2025. That's because Fortescue has signaled a ramp up at Iron Bridge to 5 million-9 million tons, from 1.2 million tons in FY 2024, while only forecasting group shipments of 190 million-200 million tons. For comparison, Fortescue shipped 191.6 million tons in FY 2024. "Management denied this view, commenting that changes in FY 2025 will only be minor, but the facts are hard to dismiss," analyst Adrian Prendergast says. "The lack of commentary makes it hard to identify the drivers of the change, but it is clear that Fortescue has been pushing some of its aging mines hard with strip ratios rising and the need for increased mine replacement invariably increasing." (david.winning@wsj.com; @dwinningWSJ)

 

[dat111]

The lowest I have seen Fortescue's price target is $14.25AUD (Macquarie). I will try to sit on my hands until Fortescue is $15.50AUD(Goldman Sacks).

 

[Gunnerguy]

Bought today at $18.28.
A small portion added to my long term buy and hold in super. Won’t be accessing this for a decade so hopefully they’ll still be around at that point. If they do drop to 14/15 I’ll be doubling down. Who knows but their production costs are well below the IO price. I’ll take the dividend yield in the mean time.
Yes we don’t know what’s going to happen medium/long term but I’m happy to take a small punt at this price.

 

[farmerge]

Bought today at $18.28.
A small portion added to my long term buy and hold in super. Won’t be accessing this for a decade so hopefully they’ll still be around at that point. If they do drop to 14/15 I’ll be doubling down. Who knows but their production costs are well below the IO price. I’ll take the dividend yield in the mean time.
Yes we don’t know what’s going to happen medium/long term but I’m happy to take a small punt at this price.

@Gunnerguy While Twiggy has that massive interest in FMG, what is good for Twiggy, is going to have to be good for the peasants also.

 

[over9k]

https://www.bloomberg.com/news/arti...r-seeks-to-sell-a-1-9-billion-worth-of-shares

This is why it's tumbling.

For those who don't know what a block trade is, it's when a HUGE amount of shares are bought/sold in giant "blocks" of 100mil or whatever at a time. They can be used to manipulate share prices, hence requiring regulatory green lights.

For those who have seen the film "margin call", this is (they're selling bonds but the principle still applies) the part of the infamous partners' meeting where the firm's legal counsel mentions that when the feds are in "up your ass trying to slow you down" he mentions that "They can slow you down, but they can't stop you, it's yours to sell".

My gut instinct is that FMG has more to drop. I have no position in it.

 

[over9k]

In case anyone cares to see what an uncontrolled block trade (liquidation) looks like. Fantastic film.

 

[TimeISmoney]

View attachment 181717

https://www.bloomberg.com/news/arti...r-seeks-to-sell-a-1-9-billion-worth-of-shares

This is why it's tumbling.

For those who don't know what a block trade is, it's when a HUGE amount of shares are bought/sold in giant "blocks" of 100mil or whatever at a time. They can be used to manipulate share prices, hence requiring regulatory green lights.

For those who have seen the film "margin call", this is (they're selling bonds but the principle still applies) the part of the infamous partners' meeting where the firm's legal counsel mentions that when the feds are in "up your ass trying to slow you down" he mentions that "They can slow you down, but they can't stop you, it's yours to sell".

My gut instinct is that FMG has more to drop. I have no position in it.

They're obviously hitting the market, look at the increase in the volume of sales.

Why would you sell them at such a discounted price when they were selling OK at around the $20 mark is the real question?

 

[over9k]

Why would you sell them at such a discounted price when they were selling OK at around the $20 mark is the real question?

Exactly. This is like when someone will tell you in warfare that it's when you don't know what your enemy is up to that you need to be worried.

Admittedly we're talking about a huge volume though. A simple margin call seems to be an unlikely explanation but aside from some other opportunity they've identified for which time is of the essence (and why wouldn't they just borrow the money for that?) I can't think of any other reason.

 

[againsthegrain]

Exactly. This is like when someone will tell you in warfare that it's when you don't know what your enemy is up to that you need to be worried.

Admittedly we're talking about a huge volume though. A simple margin call seems to be an unlikely explanation but aside from some other opportunity they've identified for which time is of the essence (and why wouldn't they just borrow the money for that?) I can't think of any other reason.

However if some bad news comes such a big sell off... wouldn't it attract a little bit too much attention for insider trading?

 

[over9k]

However if some bad news comes such a big sell off... wouldn't it attract a little bit too much attention for insider trading?

Right.

What I'm thinking is that like in the movie, they know something the rest of us don't, and are thus trying to liquidate everything before we find out.

Just like in the movie.

 

[basilio]

DJ Fortescue's Guidance Suggests Lower Hematite Output -- Market Talk
9:37 PM ET 7/25/24 | Dow Jones

0137 GMT - Morgans wonders whether Fortescue's hematite production will fall in FY 2025. That's because Fortescue has signaled a ramp up at Iron Bridge to 5 million-9 million tons, from 1.2 million tons in FY 2024, while only forecasting group shipments of 190 million-200 million tons. For comparison, Fortescue shipped 191.6 million tons in FY 2024. "Management denied this view, commenting that changes in FY 2025 will only be minor, but the facts are hard to dismiss," analyst Adrian Prendergast says. "The lack of commentary makes it hard to identify the drivers of the change, but it is clear that Fortescue has been pushing some of its aging mines hard with strip ratios rising and the need for increased mine replacement invariably increasing." (david.winning@wsj.com; @dwinningWSJ)

I think the writer had to really strain to "write something" to come up with that story. FMG ship 191.6 m tons in 24 and predict 190-200 m tones in 25. Iron bridge is hoped to go up between 5-9million tons. That is the effective range between 192-200.

Iron Ridge has already had issues with consistency of operation. I reckon FMG wants to cover itself if there are still problems.

The suggestion that the mines are running out seems to be an absolute stretch. It may be that demand slows. That the pressure on various aspects of the production process are too high. Sometimes running at 110% energy is not a good idea.

 

[basilio]

$2 Billlion worth of stock is a lot for the market to absorb in a day, I think what we saw today was just that huge parcel of shares being gradually offloaded into the market.

My understanding was that the seller announced they had 100 million shares for sale at market and over the evening the brokers had to line up enough buyers to clear that sale before the opening of formal sales. Clearly puts enormous pressure on the price.

Interestingly enough the SP dropped even further as confidence was lost. Today there has been some partial recovery.

 

[IFocus]

Block trades used to happen quietly in the background no matter the size stange this is public.

 

[over9k]

Block trades used to happen quietly in the background no matter the size stange this is public.

Either a slow news day, or someone wants you to see it.

Remember, if the product's free, you're the product.

 

[basilio]

I just checked the progress of share sales in FMG this morning. It appears as if there were huge transaction taken before official trading.
The stock opened at $18.86 with, it seems a lot of bargain hunters or supporters buying up. It then fell away sharply but has recovered somewhat.

Can someone explain the 7.05 transactions ?

 

[TimeISmoney]

I just checked the progress of share sales in FMG this morning. It appears as if there were huge transaction taken before official trading.
The stock opened at $18.86 with, it seems a lot of bargain hunters or supporters buying up. It then fell away sharply but has recovered somewhat.

Can someone explain the 7.05 transactions ?

View attachment 181741

I'm not 100% sure but they look like (Premarket) exercised option puts, maybe someone with more experience can confirm?