FMG - Fortescue Ltd

[SenTineL]

Wait a minute......you hope a share price will fall so you can buy it at a bargain price, based on a huge unknown and assumption that it will automatically go back up and you make some easy money?

That's a new one. Oooh ooh can my shares please go down so I can buy some more at a cheap price? Of course they will go back up.

The only certainty in this market is the reality of each day and share price of the moment. People may think a company is worth 10 times it's current price but that doesn't mean it will ever reach those prices. Not anymore.

 

[nunthewiser]

19th December 2008, 8:00 WST

Fortescue Metals Group has dismissed the size of about $200 million in legal claims against it as “ambit claims” as the company’s shares slump 5 per in early trading.

The company has also revealed that about $US1.5 million of its cash had been frozen in American accounts as a potential security for any claims made against it.

Shares in the iron ore miner had dropped 12 ¢ to $2.24 by 9am Perth time.

In a statement this morning Fortescue said it maintained it was legally entitled to suspend or delay a number of shipping contracts and that any potential liability was likely to be “substnatially less” than the contract’s face value.

“The alleged value of claims that have been suggested in recent press articles are considered by Fortescue to be ambit claims,” the company said.

A so-called ambit claim is an extravagant initial demand made in expectation of a counter-offer and compromise.

The company also said “less than $US1.5 million” had been frozen in US accounts as a result of a court order, but said it did not expect the total value of funds frozen would be material.

Greek shipowner Angelicoussis Group has lodged a claim in the District Court in New York claiming $US129.8 million ($193 million) in damages and interest in the biggest of three legal actions facing the miner.

Armada (Singapore) and Zodiac Maritime Agencies are also understood to have begun actions, each claiming about $US2.5 million in damages allegedly resulting from Fortescue’s decision to axe their charters.

 

[nunthewiser]

18th December 2008, 11:45 WST



Fortescue Metals Group is being sued for $130 million by Splendour Special Maritime Enterprise, which claims the mining company cancelled a five-year ship charter.

Fortescue refused to accept delivery of the Anangel Splendour earlier this month, Splendour said in a December 11 US District Court, Southern District of New York filing. The East Perth-based miner agreed on July 4 to pay $77,500 a day for the ship, according to the filing.

Armada (Singapore) Pte has also begun legal action against Fortescue for cancelling a shipment. The miner earlier this month said that it wanted to change contracts so that customers arrange more of their own transportation because of a plunge in shipping rates.

“Fortescue took prudent and decisive action to exercise its rights under its shipping contracts,” spokesman Paul Downie said today. “Any disputes are being referred to arbitration in London as per the terms of the contracts.”

The miner is conferring with its British lawyers with the aim of resolving disputes via arbitration, Downie said. Splendour’s New York law suit was “expressly filed without prejudice to the right of London arbitration.”

Armada is seeking $2.5 million from Fortescue, according to a December 4 US District Court, Southern District of New York filing. The miner has failed to deliver a cargo promised for the fourth quarter of year, the shipping line said.

Fortescue said on December 16 it was reviewing the legal status of shipping contracts that have been suspended or delayed.

Bulk-shipping rates have tumbled this year because of waning demand for shipments of iron ore to China, the biggest customer for bulk-shipping lines. The Baltic Dry Index, a measure of commodity-shipping costs, has fallen 93 per cent from a May 20 record.

BLOOMBERG

 

[Warren Buffet II]

FMG - More bad news

Now they are paying contractors with cash to "preserve cash"

As I said before, more bad news will keep rolling.

http://www.theaustralian.news.com.au/business/story/0,28124,24825156-643,00.html

Anaconda II?

WBII

 

[joeyjoejoe]

Im sorry but i feel i must post.. it will be a cold cold dark day in hell before FMG is 20c and to suggest that (if im reading correctly is totally absurd.. lets not get carried away here.. you can use whatever stats you like but we all know it wont happen. regardless of any technical analysis the stock is too WELL loved by the market for this to happen.

- Not currently holding FMG.

 

[nomore4s]

Im sorry but i feel i must post.. it will be a cold cold dark day in hell before FMG is 20c and to suggest that (if im reading correctly is totally absurd.. lets not get carried away here.. you can use whatever stats you like but we all know it wont happen. regardless of any technical analysis the stock is too WELL loved by the market for this to happen.

- Not currently holding FMG.

lol, can't be that well loved by the market. Has fallen from over $13 to around $2 - not alot of love if you ask me.

Other people on this thread have already got egg on thier face over these sort of calls, just be careful because the market isn't always rational.

If a stock can fall from over $13 to a low under $1.20, it can fall from $2.50 to 20c, don't kid yourself that the market won't let it happen because they "love" the stock.

Not saying it will fall that far but anything is possible.

 

[chansw]

Fortescue share issue begs question of cash position
Matt Chambers | December 20, 2008
Article from: The Australian

http://www.theaustralian.news.com.au/story/0,24897,24825156-643,00.html


ANDREW Forrest's Fortescue Metals Group has taken the unusual step of issuing shares to pay contractor bills in a move that raises questions about the strength of the company's cash position.

Yesterday, Fortescue said it had issued 1.55 million ordinary shares to raise $3.65 million.

A spokesman said the shares were issued to a contractor in lieu of a cash payment and that the company might do similar deals in an effort to preserve cash.

The notice came on the same day the company revealed that a US court had frozen close to $US1.5 million ($2.19 million) of its cash in relation to claims lodged by ship owners seeking more than $US130 million in damages for suspended contracts.

Paying bills by issuing shares is not unheard of but in the financial sector it is usually done with success fees.

"The issuing of the scrip shows how tight things are for Fortescue at the moment," said one analyst who covers the stock. "It is a worry, as are the legal issues with the shipping contracts."

Fortescue shares fell 20c, or 8.5 per cent, to $2.16 yesterday.

The issued shares were sold to the contractor, whom Fortescue refused to name, at $2.36 a share, the previous day's closing price.

It was unclear whether the contractor immediately sold the shares, which would have weighed on the price yesterday, or chose to stay on as an investor. Any further deals might need to be mindful of the dilution effect the issuing of new shares would have for existing shareholders.

Fortescue would not say how much available cash it had, and pointed to the $624 million figure it previously gave at the end of the third quarter. One analyst said available cash was probably lower than this due to funds Fortescue needed to keep in an account to service debt. Fortescue, however, said all the cash was available.

In another effort to preserve cash, the spokesman said, Fortescue had put on 180-day terms of credit contractors that had been working on a now-suspended expansion.

Other contractors remained on normal terms of trade, he said.

The moves to preserve cash come amid a collapse in Chinese iron ore demand and still-frozen global credit markets.

In November, Fortescue suspended plans to increase capacity at its mines from 55 million tonnes to 80 million tonnes. This month it cancelled two-thirds of its shipping contracts as it switched to traditional deals that require the buyer to freight the product.

Fortescue is being sued by Greek shipping giant the Angelicoussis Group for $US130 million ($188 million) after cancelling a five-year contract to hire a bulk carrier. The miner said yesterday the face value of the case was considered to be an ambit claim.

 

[agro]

Wait a minute......you hope a share price will fall so you can buy it at a bargain price, based on a huge unknown and assumption that it will automatically go back up and you make some easy money?

That's a new one. Oooh ooh can my shares please go down so I can buy some more at a cheap price? Of course they will go back up.

The only certainty in this market is the reality of each day and share price of the moment. People may think a company is worth 10 times it's current price but that doesn't mean it will ever reach those prices. Not anymore.

Yes

I seriously hope they go down so i can buy more - $1 - 1.20 is what i want to get them at..

what is hard to comprehend about that?

I know they will go up because they have the best iron ore assets in australia..

i'll let u know when i get more.. but yes, please bring on negative sentiment so hopefully i can get in

 

[oldblue]

Well, agro, you may get your price target met if those contractors all rush out to redeem their shares for cash tomorrow.
Keep watching that ticker!



Disc: Not holding currently.

 

[Boggo]

Yes

I seriously hope they go down so i can buy more - $1 - 1.20 is what i want to get them at..

Mid 80 cents will get my attention agro.

I am not trying to create negative sentiment, reality is the driver of that unfortunately.

 

[treefrog]

Glossary

Price to Book Ratio

The ratio of the current price per share divided by book value per share. The book value measures the value of the shareholders ownership in the company, as measured by the last full year balance sheet.

The price to book ratio is usually greater than one as the market value will usually exceed the balance sheet value attributed to the assets of the company. This is because assets are generally recorded at their original cost, less any accumulated depreciation. The market, on the other hand, is concerned with the cash-generating ability of the companys assets rather than its historical cost. If an asset can generate returns in excess of its cost of capital, then a premium will be paid for the asset. This premium is the price to book ratio.

FMG P/B ratio currently -3.69 (yes folks that is a minus sign)

so suggest you check the funny mentals at time of buy regardless of whether that's $2, $1 or 20c

2.8billion shares already out there and printing more - it is still a spec share folks

 

[shaunQ]

I know they will go up because they have the best iron ore assets in australia..

I am an absolute amateur but know that having the best assets means nothing if you aren't the best at managing those assets. I would have thought those assets will look just as attractive to their bankers.

The assets will remain, who controls them is another matter.

Even being the best doesn't guarantee success. Look at Betamax video, the DVORAK keyboard, the Blue-ray competitor.

 

[Sean K]

i am starting to accumulate this now

looks like its heading higher



no chance of it going under $2 now

Another good quote to hold on to for posterity.

Absolutes in this game end up with egg on one's face.

I'm afraid to say that I'm praying to the giant tea pot that you cop it.

Eggs primed, pies in reserve.

Good luck agro.

Eggs and pies both thrown.

Hopefully you can see the futility of laying out these types of statements. It will both assist in your trading, and save credibility.

Good luck.

 

[prawn_86]

Eggs and pies both thrown.

Hopefully you can see the futility of laying out these types of statements. It will both assist in your trading, and save credibility.

Good luck.

Yeh i think anyone relying on agros calls, opinions or credibility would be severely disadvantaged. He has even admitted to being a ramper

 

[nomore4s]

Yeh i think anyone relying on agros calls, opinions or credibility would be severely disadvantaged. He has even admitted to being a ramper

lol, fading him will be a good option.

When he's bullish sell, and when he's bearish buy.

The ultimate indicator:, been pretty accurate so far.

 

[tigerboi]

Re: FMG-getting a pounding

gee talk about getting reamed real hard,most traded by 8m volume & ripped down nearly 20%...

i feel pretty happy now i got in at $33 & alot more at $25 then set the sell target at $50 & was happy to take nearly 100% even when it went to $13.00($130) later on

as for agro well he let it slide from $13 to sub $6 before selling on a margin call...stop loss is the go if your not going to set a sell price,things look ugly atm...tb

 

[oldblue]

Yeh i think anyone relying on agros calls, opinions or credibility would be severely disadvantaged. He has even admitted to being a ramper

But his posts don't get pulled?

Must be keeping him on for the entertainment value, or, as has been mentioned as a contrarian indicator!

 

[joeyjoejoe]

my advice after watching FMG everyday for about 2 years.. the way AT THE MOMENT id say to make money on it..... find a dirt cheap entry point.. buy during one of those rallys that occur every now and then try and get in either the day before.. or (more likely) at 10:01am on the day... when you can see it going nuts in the pre open.. and then sell it out 1-2 weeks later when you have made 30-40%.. wait for it to go down again then repeat.. and for those who say "you cant time the market"..... i ask whats your average price on FMG (probable responses 7,8 dollars or higher....(im not saying theres anything wrong with that.. but dimiss what im saying at your own peril) surely on THIS STOCK ... you would have been better with this stratergy if stop loss was used.

i dont expect to cry myself to sleep because i sold it for 2.50 or 2.90 and then it went to $13 any time soon

hi guys its seems the cycle is on the downward trend clearly....... as per the above posting from 6th of december...... the key i belive is to buy when its trending up.. it might sound obvious but you would be surprised how many people put it a bid for say $1.50 or $1.25 or $1.00 because its a nice even number.......


(no people dont use that as entry point i hear you say?? a study of the market depth shows you they do......currently at the close there are 80 people wanting to buy 400,000 shares at 1.70...

the next closest after that is only 18 and 15 people at 1.71 and 1.68

and they consider it a good entry point with no other reason..(even though the stock is still trending down.....perhaps averaging down at a set price to make your figures match up nicely..) your destined to be plaiyng catch up before you have started) however the key is to buy it when its trending UPWARDS espically for large one day gains as mentioned.. if u can buy at 10.01AM (or at the open) at the start of a big 20-30% daily gain... youll be in front and have some room to play.....(assuming of course all the increase does not appear in the OPEN price) ie. it goes up gradually during the day........and IMO with FMG normally it rises steadily throughout the day..........its not normally one to open up HIGHER and then remain unchaged throughout the day......

if all goes to plan and it goes up instantly (within minutes of your purchase....)you can always set a stop loss at your entry point (break even) or you can set it at -10%........ in the mean time ill be watching.. waiting and lurking for that day...if that day never comes.. i wont have lost anything.

work out how much you want to make.. work out what % increase you will need and how much capital you have to spend and set a goal and stick to it.

use your stop loss....or bail out before then if you then you have made decent profit and you expect to be soon wiped out by another downward trend settling in

 

[MichaelD]

no chance of it going under $2 now

I (and others I know) all want to buy FMG back around $1 - $1.20!!

Must be keeping him on for the entertainment value, or, as has been mentioned as a contrarian indicator!

So, Agro, let's put a chronology on this.

1. At the start of December you felt there was NO CHANCE of FMG going below $2 and you were "accumulating".
2. 3 weeks later when the price DOES go below $2, the plan is to buy MORE of FMG at $1 - $1.20. That's 1/2 of the price which it couldn't possibly get down to in the first place.

So, the stock has proved your analysis wrong yet again, it has blown you up once in the past and you STILL love it.

Mate, at what point will you stop loving FMG? Before or after you are forced to declare bankruptcy because of it?

If all punters are like you (and they apparently are), no wonder there are people getting smashed in the markets left right and centre at the moment and then complaining to the media about how it was everyone else's fault.

 

[agro]

ok, i will mention it once and for all... every company has it's ups and downs and don't expect me to be everyone's crystal ball..

and i wont stop loving FMG either because i know the Chinese love this company..

i will sell out when Twiggy sells.. and for the final time i will be buying at $1 - $1.10

enough said..so continue to post in this thread, ur only wasting ur time