ILU - Iluka Resources

[Ves]

Once again this highlights the trouble RM has with relying on forecasts, happily this can create opportunity when those forecasts are missed. As long as the downgrade is not a permanent state of affairs.

I will also say that on YMYC (it's on Youtube) he also mentioned that the preferable "conservative" valuation was also shown to have a margin of safety when compared to actual market price in May.

edit: The point is that it isn't the analyst forecasts or the conservative earnings forecasts that you make up yourself, the fact is that the ROE method of valuation for mining companies (or those with lumpy earnings) just isn't accurate.

 

[Klogg]

...the fact is that the ROE method of valuation for mining companies (or those with lumpy earnings) just isn't accurate.

I learnt that the hard way... (Not on ILU though).

RM is really showing his true colors with ILU, the mining services company that requested more capital (I forget the name), and his new article contemplating TGA when he just sold out!

 

[So_Cynical]

(25th-March-2011) I sold out today at the open $12.25 all my shares, both parcels for profits of 312% and 265%

What is it with this forum?, 17 Posts in this thread today on some negative news and the resulting significant price fall, and yet 3 years ago when ILU went from $3 to $12 in a 2 year period there was no interest, nothing, this thread was a ghost town.

Excluding my posts there are 14 posts from April 09 ($2.80) to Mar 2011 ($12.25) every one likes a train wreck i suppose.

~

Support? there is none...well support when i was buying was $2.70 that was in early 09 when the world was ending for the first time since the tech wreck, worst case scenario is that it will be support again, i certainly would not be interested until the price got to under $7

 

[prawn_86]

What is it with this forum?, 17 Posts in this thread today on some negative news and the resulting significant price fall, and yet 3 years ago when ILU went from $3 to $12 in a 2 year period there was no interest, nothing, this thread was a ghost town.

Excluding my posts there are 14 posts from April 09 ($2.80) to Mar 2011 ($12.25) every one likes a train wreck i suppose.

~

Support? there is none...well support when i was buying was $2.70 that was in early 09 when the world was ending for the first time since the tech wreck, worst case scenario is that it will be support again, i certainly would not be interested until the price got to under $7

Well at least there is interest now and discussion. Over the last couple weeks there has been a lot more posts in stock threads.

With regards to ILU, it does seem to be one of those stocks that always has downgrades, and over-reactions to those downgrades. Downer EDI is another one that springs to mind

 

[Boggo]

What is it with this forum?, 17 Posts in this thread today on some negative news and the resulting significant price fall, and yet 3 years ago when ILU went from $3 to $12 in a 2 year period there was no interest, nothing, this thread was a ghost town.

Get used to it SC, its just how it works.
When I said that TGA was going lower I had a price on my head but when it hit the turn point and I gave an upside target they all went quiet.
The level of responses are potentially an indication of the number of people that have got it wrong and are still holding or are not believing what is happening until they are told why. The next stage for them are the fundamental valuations which are the last stages of psychological justification of indecision.

There are of course others that enter the discussion who see opportunity in a decline and look for downside targets and potential new entry opportunities.

The interesting bit is the time delay in the increased discussion, ILU has been in free fall since 7th May but the discussion seems to be dependant on requiring a company report for confirmation of what anyone with their finger on the pulse would have seen as likely up to two months ago.

Just my

 

[willstor]

Well at least there is interest now and discussion. Over the last couple weeks there has been a lot more posts in stock threads.

With regards to ILU, it does seem to be one of those stocks that always has downgrades, and over-reactions to those downgrades. Downer EDI is another one that springs to mind

so no quick buck short covering back up a dollar then?

 

[robusta]

Could not believe this fell below $8 yesterday so I picked up a small parcel for my super, may be another opportunity today.

 

[So_Cynical]

Could not believe this fell below $8 yesterday so I picked up a small parcel for my super, may be another opportunity today.

When i saw you had posted in this thread i immediately though...no he couldn't of brought all ready.

But you did...sorry robusta this has to go lower, all things being equal.

 

[Ves]

But you did...sorry robusta this has to go lower, all things being equal.

Equal to what exactly?

 

[So_Cynical]

Equal to what exactly?

All things.

3 years ago ILU traded at around $3 a share and now trades at around $8.20 ~ 2.7 x higher (approx) so is ILU a 2.7 x better company? is the outlook 2.7 x better? Is the current price realistic all things considered?

I clearly don't think so.

 

[RottenValue]

All things.

3 years ago ILU traded at around $3 a share and now trades at around $8.20 ~ 2.7 x higher (approx) so is ILU a 2.7 x better company? is the outlook 2.7 x better? Is the current price realistic all things considered?

I clearly don't think so.

3 years ago (Jun 2009), ILU had as EPS of -0.07 cents, worst case scenario for 2012 is approximately $1.00 per share. Current forecast, after the recent downgrades is about $2 in 2013 and $2.30 in 2014

What has that got to do with the short term share price - very little obviously.

I think the outlook is obviously better than it was then - thats why we have a market where people can buy and sell at a moments notice.

Disclaimer: happily buying ILU on the dips

 

[So_Cynical]

3 years ago (Jun 2009), ILU had as EPS of -0.07 cents, worst case scenario for 2012 is approximately $1.00 per share. Current forecast, after the recent downgrades is about $2 in 2013 and $2.30 in 2014

What has that got to do with the short term share price - very little obviously.

I think the outlook is obviously better than it was then - thats why we have a market where people can buy and sell at a moments notice.

Disclaimer: happily buying ILU on the dips

You mite want to go and look at the 2008 and 09 announcements and look beyond the EPS.

In 2009 i was astounded at posters in this thread talking about selling IAU at $3.20 and now here you are buying (on the way down) at around $8 ~ in 2009 i was the only person buying this and couldn't get anyone else interested. :dunno:

I think for some people its a lot easier to see value in something that was more valuable compared to seeing future value in something that is not considered valuable.

 

[skc]

Could not believe this fell below $8 yesterday so I picked up a small parcel for my super, may be another opportunity today.

If you simply change your entry criteria from

"Good" company issuing profit downgrade with uncertain outlook

To

"Cheap" company issuing profit upgrade with positive outlook

I think you will enjoy better win rate and lower drawdown.

 

[robusta]

If you simply change your entry criteria from

"Good" company issuing profit downgrade with uncertain outlook

To

"Cheap" company issuing profit upgrade with positive outlook

I think you will enjoy better win rate and lower drawdown.

Cheers skc I think I know what you are getting at, my entry criteria is for good cheap companies, full stop. The coincidence is many of them only become cheap (in my opinion) due to a over reaction to a profit downgrade.

As for the uncertain outlook, or positive outlook I think you pay a much higher price in the market for a positive outlook. With regards to ILU no doubt there is a heap of uncertainty around but with a strong balance sheet and looking five years plus I think things will work out OK once the great deleveraging is over.

 

[robusta]

Interim report out today, dividend up, balance sheet still strong. The ability to vary production and reduce margin deterioration is a rarity in a commodity business.

 

[tinhat]

A good day to buy ILU. Buyers who bought on JP Morgan advice in September are capitulating today based on the latest JP Morgan rating.

 

[willstor]

Could not believe this fell below $8 yesterday so I picked up a small parcel for my super, may be another opportunity today.

Well done sir. Take profit whilst it's there though.

 

[robusta]

Well done sir. Take profit whilst it's there though.

Cheers, I think there is more upside in Iluka however. They are one of the few resource companies with a modicum of control over pricing. Any further deterioration in the global economy should result in less production coming on line from competitors and any improvement should have a positive effect on this commodity. Meanwhile the dividend is not too bad while I dither.

 

[robusta]

Forgot to add, it would not surprise me if one of the big resource houses or some Chinese conglomerate is thinking the same as me. Iluka could well be a takeover target at somewhere north of $15.00

 

[willstor]

Cheers, I think there is more upside in Iluka however. They are one of the few resource companies with a modicum of control over pricing. Any further deterioration in the global economy should result in less production coming on line from competitors and any improvement should have a positive effect on this commodity. Meanwhile the dividend is not too bad while I dither.

interesting view...i see what you are saying, personally I think we've seen a huge surge in a short space of time across the board, so I'd be keen to exit anywhere close to 10 with a view to a correction / cool down period. I was in at 905 and out at 10 FWIW, nothing earth shattering but the profit is there.