FMG - Fortescue Ltd

[LeeTV]

All I can say is I'm glad I never listened to any of the "professionals" as I would never have bought FMG in the first place if I had. My last buyin was @ $9.48 and sold recently @ $12.00 Bought back in yesterday @ 10.70, damn it, and will probably be getting the same amount tomorrow(make my overall buy price a little better) dependant on the market as a whole. FMG has always been a little volatile, keeps you on the edge of your seat when trying to pick the bottom and top, I like to make a few trades along the way personally

Some of the latest predictions...

Macquarie 25/06/2008 5 Underperform $6.96 - 26.7%
The broker has continued its move toward being more understanding of why everyone so loves Fortescue. There has never been an argument over potential, only price. So the analysts flew out to the Pilbara to have a look for themselves.
The result is a target price upgrade from $4.91 to $6.96. The RIO ((RIO)) iron ore price settlement has helped. However, while the broker has increased forecast FY09 earnings by 10% it has cut FY10 by 18% due to a push-back in expansion.

Underperform is maintained. There is better value elsewhere in the space, the broker reiterates.


Citi 25/06/2008 5 Sell, High Risk $8.70 - 8.4%
Citi has bumped up Fortescue's target price to $8.70 from $7 but maintains its Sell rating, noting a market scramble to secure iron ore supplies.
The broker notes Rio Tinto has settled iron ore prices with Baosteel at a higher than expected level, the benefits of which have been largely offset by a higher $A.

It has cut its earning forecasts 3% in FY09 and added 4% to FY10 estimates.


JP Morgan 25/06/2008 3 Neutral $10.64 12.0%
Target $10.64 (was $7.50). Higher iron ore prices make an expansion of operations more likely in the broker's view, so factoring in an increase to 160mt annually sees the broker lift its price target on the stock.
Despite the higher target there is no change to the broker's Neutral rating.

 

[renim]

one other thing. historically fmg appeared valued as a project, and projects in oz recently have all gone over budget and generally over schedule. if a project did not go over budget then its original budget forecasted steel and oil price hikes, + skills shortage (fabricators find outsourcing to be failing in a heated market, do it inhouse, or don't even bother). fmg managed to meet schedule and is a beneficiary of a primary cause of project cost overrun (being a iron ore producer). they have current competence and experience for their next expansion, something juniors may lack.

i know thats all story and not numbers, how do you see it?

 

[LeeTV]

An interesting read http://afr.com/home/viewer.aspx?EDP://20080703000020858157&magsection=industry-metals-mining&portal=_summary&title=Fortescue+battling+legacy+of+the+bonds&source=/_xmlfeeds/industry/metals_mining/feed.xml

Fortescue Metals Group is examining options for expansion that avoid the control of financiers. A $A2.7 billion bond raising in August 2006 has terms that restrict the speed and size of expansion of Fortescue's iron ore operations. One possibility is the demerger of the company's west Pilbara iron ore deposits, as bondholders can only exert influence over assets in the parent company. While not among Fortescue's most preferred options, the company has registered a company name for the purpose, West Pilbara Iron Ltd

 

[njc.corp]

Make sure you leave some profit in the market for the next person.

Good luck.

Bill[/QUOTE]


Bill-is that not what we do all the time- leave profits for others-wether they turn it into a fortune or more misfortune?

Oh well billy-we will see how the future turns out-

Thanks

Nick--

 

[Miner]

DJ is showing picking up but on COmmsec there are 359 buyers for 908,432 units and 637 sellers for 2,005,772 units
Probably in the morning the situation will be reversed

West Pilbara Iron is a good coy

Probably Andrew has put his focus on POS and that could be the reason why FMG sagged and POS is picking up notwithstanding all iron ore stocks have plummetted on Thursday

 

[MRC & Co]

All I can say is I'm glad I never listened to any of the "professionals".

I would call them salesmen.

They make money from your (not you inparticular) commissions.

Not from their choices.

 

[agro]

I would call them salesmen.

They make money from your (not you inparticular) commissions.

Not from their choices.

not to mention less than 5% of FMG is in the hands of australian brokers

and queit often i find that when a broker says "sell" they actually want to buy it themselves..

so whenever i see "sell" now, i usually interpret it as a buy signal

 

[gav]

I for one wasnt too worried about yesterday, although I wasnt too happy about it either! I saw it more as a buy opportunity more than anything (not that I have the capital to put any more in). Just look how much RIO and BHP got smashed too.

I've held for 7 weeks, its been a roller coaster ride! I have been as much as 41% up in that time, and at one stage yesterday I was less than 3% up. Its seems to sky rocket as fast as it falls, and the last 2 times it sky rocketed to all time highs. I guess I could have made alot from selling/buying at the right time, but then I could have also been stung badly if I got it wrong. I will continue to hold

 

[subaru69]

Gav,

My sentiments EXACTLY
- not happy about the drop but not concerned
- and it was an opportunity to buy more miners but no more capital (I've been following the 'Bottom Pickers' thread, however not smart enough to have sat patiently on the sidelines.)
- we must have the same buy price too

I wish you well because in a way it's the same for me

 

[gav]

Then in that case, I wish you very, very well also


Gav

 

[renim]

7 weeks hey, it's quite a ride getting on fmg. but if you're not too smart, it can be quite rewarding.

i think analysts tend to be 'conservative' in their stated opinions and in their recommended options, which shouldn't necessarily represent their own opinion.

FMG bought its deposits cheap. FMG spent 3bill on project. Accountants might 'value' this as a 3 bill and a bit company. Until evidence of actual cash flow, there will remain some skepticism. Current stock value about 30 bill. Hmmmmm looks fishy, maybe overpriced by 10 to 1, lets sell shorts on this stock.

however those russians bought in last year, and it was to make money. the yanks are still holding, the chinese want some. All these also have pretty smart analysts, particularly when its their own funds they are using. remember it was australian fund managers who virtually gave MIM to X Strata for a song (don't get me started there)

 

[renim]

An interesting read http://afr.com/home/viewer.aspx?EDP://20080703000020858157&magsection=industry-metals-mining&portal=_summary&title=Fortescue+battling+legacy+of+the+bonds&source=/_xmlfeeds/industry/metals_mining/feed.xml

Fortescue Metals Group is examining options for expansion that avoid the control of financiers. A $A2.7 billion bond raising in August 2006 has terms that restrict the speed and size of expansion of Fortescue's iron ore operations. One possibility is the demerger of the company's west Pilbara iron ore deposits, as bondholders can only exert influence over assets in the parent company. While not among Fortescue's most preferred options, the company has registered a company name for the purpose, West Pilbara Iron Ltd

interesting but silly. even with the current market difficulties, FMG's financiers are either very happy with FMG or quite capable of being replaced by FMG (refinanced elsewhere). but i expect 'practical completion will be reached soon anyway. FMG may however need a new vehicle for its endeavours with cazaly or long term plans for port/infrastructure etc etc etc.

remember a 10% dilution would wipe out all bondholders debt (except the royalty type stuff, which would like further acceleration)

IMHO a particular trait of forrest historically has been a higher than normal respect for bond holders, it was possibly one reason why he got turfed from annaconda, and also why he could get fmg kick started.

i think this article annoyed fmg, they tend to ignore most news articles about them, but this one they did respond to tday.

 

[2020hindsight]

probably already mentioned, but
2 July "conversion of employee options" 56,000 at 70c
3 July ditto 350,000 at 28c
4 July ditto 125,000 at 27c... etc

I assume (?) that those employees will be tempted to (and are free to) sell these shares soon (if they haven;t already) - who wouldn't want to become an instant millionaire - and that's 500,000 shares each making profit of almost $10 = $ 5million - possibly sold with a sense of "who cares" (?).
Has to drive things down a bit more than say BHP (you'd think?).

But I'm probably wrong in my assumption of any great significance of this effect.

 

[Miner]

probably already mentioned, but
2 July "conversion of employee options" 56,000 at 70c
3 July ditto 350,000 at 28c
4 July ditto 125,000 at 27c... etc

I assume (?) that those employees will be tempted to (and are free to) sell these shares soon (if they haven;t already) - who wouldn't want to become an instant millionaire - and that's 500,000 shares each making profit of almost $10 = $ 5million - possibly sold with a sense of "who cares" (?).
Has to drive things down a bit more than say BHP (you'd think?).

But I'm probably wrong in my assumption of any great significance of this effect.

Dear 2020

Most of what you said is right as per my opinion

However the assumption of becoming instant millionaire may not be right
Often the lucky people having those cheap options could be one of the directors or senior managing staff , They are already multi millionaires

It has been a tradition to pay some of the contracted price in terms of options by FMG in recent past
So those option holders could be the contractors needing cash

With such a large volume of share chips available in the market even if those exercised options come to market as SALE will make ripple unless the holders happen to be one or more of the directors

 

[2020hindsight]

With such a large volume of share chips available in the market even if those exercised options come to market as SALE will make ripple unless the holders happen to be one or more of the directors

Miner, howdy
I should have said (I guess) that there are more shares with staff etc in that situation than just those .. plenty of new billionaires there - and (maybe) no equivalent in BHP.

but I agree ... not a ripple lol.

I was just trying to find an easy /convenient / self delusionary answer / = ray of hope that the blip in the graph (FMG lost 20% since 30June) was a temporary phenomenon
PS I hold - for the time being anyway

 

[renim]

a bit choppy recently,
i've tried to work out the winners and losers so far

winners
investors who held
vs
investors who stayed away

winners
short sellers who have good exits
vs
investors who stop loses got triggered

winners
bulls who entered and exited well
vs
bulls who entered and exited poorly.

 

[Miner]

a bit choppy recently,
i've tried to work out the winners and losers so far

winners
investors who held
vs
investors who stayed away

winners
short sellers who have good exits
vs
investors who stop loses got triggered

winners
bulls who entered and exited well
vs
bulls who entered and exited poorly.

Hi Renim

It looks like you have become Wordsworth or Shelly - started writing a poem on winners vs not so winners

Keep it up and well said

 

[MACH]

FMG falling, which is a shame cause it was at its peak highs, not to long ago. Most of the drop is panic selling though.

 

[agro]

FMG falling, which is a shame cause it was at its peak highs, not to long ago. Most of the drop is panic selling though.

well observed - can you please enlighten me to how many other stocks are also falling??

i still remain bullish on this stock and iron ore stocks - nothing has changed, you are buying a business...

 

[ans25]

well observed - can you please enlighten me to how many other stocks are also falling??

i still remain bullish on this stock and iron ore stocks - nothing has changed, you are buying a business...

Agro mate, wake up and smell the coffee and dont be blinded.

This has dropped abt 25 percent in a matter of a week or so and although other stocks are falling, yes, FMG seems in a mini spiral.

I am sure that it will pick up eventually, but in the meantime Im waiting until it hits under $9 for my entry.

Good Luck to all