FMG - Fortescue Ltd

[Captain_Chaza]

Yeah The near 50% DD certainly aren't for everyone , this is why FMG never a buy and hold for me . Happy to take those 2-3month 40% ish rallies though . will never hold for a Div though

What about if they threw in a few Fly Buy Points?

 

[Value Collector]

Yeah The near 50% DD certainly aren't for everyone , this is why FMG never a buy and hold for me . Happy to take those 2-3month 40% ish rallies though . will never hold for a Div though

I have been holding for over 10 years now, it’s the Best investment I have ever made, and I have a lot of good ones to choose from.

Every 1 cent in Dividend is $2,400 in my pocket, so you do the math on some of the dividends I have been getting over the past 10 years, and you will quickly see why I retired at 36 years old (but yeah this buy and hold collecting dividends isn’t for everybody)

 

[Chipp]

I have been holding for over 10 years now, it’s the Best investment I have ever made, and I have a lot of good ones to choose from.

Every 1 cent in Dividend is $2,400 in my pocket, so you do the math on some of the dividends I have been getting over the past 10 years, and you will quickly see why I retired at 36 years old (but yeah this buy and hold collecting dividends isn’t for everybody)

I am happy for you , some people dont mind the 75% DD , i do . Happy to trade FMG though but i only hold it when it goes up

I aint no slouch either champ and i certainly dont work for the man either

I get dividends every week , now lets leave the dick slinging ego **** where it should be Mr Figjam . not on channel

I had this guy on ignore from the getgo when i first posted here and i took everyone of ignore couple days back , wont be doing that again


.

 

[basilio]

I am happy for you , some people dont mind the 75% DD , i do . Happy to trade FMG though but i only hold it when it goes up

I aint no slouch either champ and i certainly dont work for the man either

I get dividends every week , now lets leave the dick slinging ego **** where it should be Mr Figjam . not on channel

I had this guy on ignore from the getgo when i first posted here and i took everyone of ignore couple days back , wont be doing that again


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That's rough Chipp. VC's contribution to the investing knowledge on ASF is , in my mind, excellent. The analysis he did on FMG was thorough quite insightful and very valuable. I certainly took notice (as a I believe some other posters) and got my value from the company.

Yes he did did do very well from his analysis and decision. He rarely notes it. But IMV sometimes its worth highlighting the opportunities that can be taken and the perspective of an investor who has (historically ) done well on that decision.

It's a free society isn't it ? You can (quietly) decide who you want to read or not. Trashing him in the process, IMV, is not cool or warranted.

 

[basilio]

I wonder if/when Twiggy will come back into the market and buy FMG shares ? He has done so in the past when he believed they were badly oversold. Would be an interesting vote of confidence for him to step back into the market and increase his stake.

 

[Value Collector]

I wonder if/when Twiggy will come back into the market and buy FMG shares ? He has done so in the past when he believed they were badly oversold. Would be an interesting vote of confidence for him to step back into the market and increase his stake.

I reckon at these levels FMG should be considering a buy back.

 

[TimeISmoney]

Looks like there are investors trying to shake the tree of the weak, (still low amounts of shorts) the other morning there were people trying to sell $2 under the asking price on start up. Sept and Oct are usually the worst times of year plus the low iron ore prices. If the SP doesn't make a comeback by Dec or Jan you know the SP is in a lot of trouble.

 

[Value Hunter]

I reckon at these levels FMG should be considering a buy back.

I understand what you are saying from a valuation perspective but from a balance sheet perspective it could be questionable. Fortescue already has $500 million of debt which is admittedly modest in relation to its assets and cash flow generation but the green energy side of the business is highly capital intensive and could suck in a huge amount of additional capital over the next 5 years hence it would be prudent for them to maintain a strong balance sheet to avoid any capital raising in 2 or 3 years time to have to fund the green energy side of the business

 

[Ferret]

the green energy side of the business is highly capital intensive and could suck in a huge amount of additional capital over the next 5 years hence it would be prudent for them to maintain a strong balance sheet to avoid any capital raising in 2 or 3 years time to have to fund the green energy side of the business

I was never in favour of FMG taking on the green energy business.

That said, Twiggy has shown he can be quite ruthless with canning projects that aren't working out.

I don't think he will let the green energy business cause capital problems for FMG.

 

[Dona Ferentes]

best in class?

. from Market Index:
iron ore miner (and green energy hopeful) Fortescue (ASX: FMG) took out top spot for the most upgraded ASX company during August earnings season with an impressive six upgrades. This is especially impressive considering the next best cohort were at three upgrades, and most companies only gathered two.

Having said that, there should be some context here – none of the major brokers had FMG at a BUY prior to its recent share price plunge – and Bell Potter and RBC Capital Markets were running at SELL (all others were at HOLD). Those two sell ratings are now a notch higher at hold, and nervous FMG shareholders may take heart from the fact that the other four brokers increased their ratings to buy/buy equivalents (e.g., “ADD” or “OVERWEIGHT”).

 

[qldfrog]

best in class?

. from Market Index:
iron ore miner (and green energy hopeful) Fortescue (ASX: FMG) took out top spot for the most upgraded ASX company during August earnings season with an impressive six upgrades. This is especially impressive considering the next best cohort were at three upgrades, and most companies only gathered two.

Having said that, there should be some context here – none of the major brokers had FMG at a BUY prior to its recent share price plunge – and Bell Potter and RBC Capital Markets were running at SELL (all others were at HOLD). Those two sell ratings are now a notch higher at hold, and nervous FMG shareholders may take heart from the fact that the other four brokers increased their ratings to buy/buy equivalents (e.g., “ADD” or “OVERWEIGHT”).

Hum, some big players need to offload?

 

[Value Collector]

I understand what you are saying from a valuation perspective but from a balance sheet perspective it could be questionable. Fortescue already has $500 million of debt which is admittedly modest in relation to its assets and cash flow generation but the green energy side of the business is highly capital intensive and could suck in a huge amount of additional capital over the next 5 years hence it would be prudent for them to maintain a strong balance sheet to avoid any capital raising in 2 or 3 years time to have to fund the green energy side of the business

If you check out the recent presentation, you will see that the capex for green energy is quite modest, and it’s FMG’s Intention to sell down some of the equity in these projects over time.

The debt they hold is also very long dated, and can easily be rolled, it’s probably a permanent part of the capital structure, not something they intend on paying back any time soon, in fact at these levels it makes more sense to buy back shares than to buy back debt.

I mean the dividend saving on the shares that are bought back is going to be more than the interest saving on paying off the debt.

 

[Value Collector]

Hum, some big players need to offload?

Or just like blind Freddy they can see the recent share price drop has made the company a bargain, and all but guaranteed a long term position taken at this level will be highly rewarded over time through dividends and likely capital growth.

 

[TimeISmoney]

Hum, some big players need to offload?

Yeah, you watch after they've taken everyone's money, they'll be telling everyone it's the greatest stock under the sun.

 

[TimeISmoney]

Or just like blind Freddy they can see the recent share price drop has made the company a bargain, and all but guaranteed a long term position taken at this level will be highly rewarded over time through dividends and likely capital growth.

Twiggy is too far ahead of his time with hydrogen, the EU will eventually penalise anyone landing in their territory that's not using green fuel. They'll eventually get rid of carbon credits that most of them are using ATM. Many things in this domain are happening in the background that aren't hitting mainstream media. Whether they can use other energy methods to get there or how feasible it is to use hydrogen is yet to be seen.

 

[Value Hunter]

If you check out the recent presentation, you will see that the capex for green energy is quite modest,

Sure if you believe those projections which are likely to be optimistic. In my mind its the sort of thing that is likely to go way over the capex budget and also my gut feeling is they will add even more new green energy projects to the pipeline over the next few years.

 

[Value Hunter]

Or just like blind Freddy they can see the recent share price drop has made the company a bargain, and all but guaranteed a long term position taken at this level will be highly rewarded over time through dividends and likely capital growth.

I don't follow Fortescue too closely, but I know you do. Can you run us through what the numbers for earnings per share for Fortescue would look like for the next few years if Iron Ore goes to U.S. $70 per tonne and stays there.

 

[Value Collector]

Sure if you believe those projections which are likely to be optimistic. In my mind its the sort of thing that is likely to go way over the capex budget and also my gut feeling is they will add even more new green energy projects to the pipeline over the next few years.

Yeah, whether they are building mines of green energy, so things will have cost over runs, but over the years the annual projections have been pretty accurate, and capex will probably not be more than retained earnings and depreciation.

But also as previously stated they plan to use a mix of their equity, green bonds, government funding and also selling down equity.

 

[Value Hunter]

Personally I think a company that operates in the mining industry and therefore by definition has highly cyclical earnings should keep a conservative balance sheet which in Fortescue's case I think that means keeping total debt (including green bonds, etc) under the $1 billion dollar mark.

Twiggy is an owner operator and a smart guy given where the FMG share price is why do you think the company hasn't initiated a share buyback yet? My guess would be because of the reasons I am talking about (the balance sheet). But I am interested to hear what you think is the reason for a buyback not being initiated? Or do you think it will be announced soon?

 

[Value Collector]

I don't follow Fortescue too closely, but I know you do. Can you run us through what the numbers for earnings per share for Fortescue would look like for the next few years if Iron Ore goes to U.S. $70 per tonne and stays there.

I have run through all that in the past, as a basic rule of thumb, I use $35 as their break even price, and every $1 above that figure adds around $0.50 profit per tonne, so you can multiply that by tonnes produced and divide by shares outstanding, That gives you a rough idea of profitability per share.

but also it’s not overly important where the fluctuations go, what is important to the long term holder is the average price over the years.

I did my valuation which valued FMG at $28 using an average ore price of $90 per tonne, So if we have Iron Ore trading at $120 for 6 months, it can drop to $60 for 6 months and we still get the $90 average.

The intrinsic value of the company does not fluctuate as wildly as the share price does in relation to short term movements in ore price.

What is important is to make a rational estimate of what you think the average ore price will be over your holding period, and don’t put to much emphasis on the peaks and troughs.