Blackrock World Mining Share Discussion Threads

[essentialinvestor] 08/12/2015 14:07

I live just a few mins from MBW in Brooklands Weybridge, worth a visit
if you like your cars, and it's free entry.

[rcturner2] 08/12/2015 14:07

Seems a bit mixed at best.

[aleman] 08/12/2015 14:04

RC - Here's an example of the sales growth in the summer, since when sales are rckoned to have picked up slightly thanks to government stimulus. Brand sales tie in with the total sales figures quoted. Don't you think mannufacturers would point out if official figures were not matching theirs?



Mercedes’s seven-month sales increased 15 percent to 1.05 million autos. BMW’s sales for its main brand over the same period totaled 1.08 million vehicles, up 5.2 percent from a year earlier, while Audi’s sales advanced 3.5 percent to 1.05 million vehicles.

I think you are right to question everything, though. There are lots of people out there trying to part you from your money.

[essentialinvestor] 08/12/2015 13:45

30 pence eh, why stop there?, 15, 10?.

[dlku] 08/12/2015 13:43

get these at 30p befoe long

[essentialinvestor] 08/12/2015 13:41

Yes on both counts hopefully, what is now happening in mining is what OPEC
hoped to achieve in the oil market.

I am hoping Iron Ore falls in to mid $30's and stays there for awhile,
that will take out another swathe of capacity and production.
Just my best guess, reserve the right to be wrong!.

[rcturner2] 08/12/2015 13:35

Aleman, there are two sides to that coin, why do you believe the stats about car sales? Don't you think the CCP have some vested interests here?

[my retirement fund] 08/12/2015 13:31

RIO - do you really understand RIO's debt dynamic and cost base to imagine its good value in the present environment?

[essentialinvestor] 08/12/2015 13:21

That is why I am buying RIO enviro, calculating they are a sector winner here.
My timing may be well off admittedly and appreciate your take is far
more bearish, but longer term I see value.
There may be far better entry points, but it's a nice balance to PNL.

I thought last week I was too cautiously positioned as markets continued up,
the outlook appears a little different just a few days later.

[my retirement fund] 08/12/2015 13:14

from the newswire:

The problem for Anglo, and other more highly leveraged miners, is this: even aggressive cuts to costs and investment, and piecemeal asset sales, can't keep up with the deteriorating price environment. Despite Anglo's $15 billion in liquidity, that backdrop means an equity raise can't be ruled out. Indeed, raising extra funds early has proved a solid strategy given the trajectory of the commodities downturn.

Anglo, putting it politely, isn't known for its ability to move at speed. Its $2 billion in asset sales to date have been painstakingly slow. Though it is already closing some mines, the company only promised further details on the restructuring at earnings in February.

[rcturner2] 08/12/2015 12:22

Fair enough aleman, it will all come out in the wash in the end. I think China demand is very weak, their economy is going downhill fast.

[aleman] 08/12/2015 12:22

It's interesting that China seems to be selling $s according to that article. It looks like they are taking the opposite line to the long $/short commodities trade ahead of the Fed meeting. Who will win that one?

[rcturner2] 08/12/2015 11:45

aleman, how does this article fit with your analysis:

[rcturner2] 08/12/2015 11:41

Aleman, predictions are always difficult, I tend to deal in what seems most likely and the effect of tail risks. I would say that the dividend will be cut and probably cut to the bone. If you are banking on option income why invest in this trust at all? Invest in some purpose built financial wizardry device, this is supposed to be a vanilla trust. As regards the assets held by the trusts I see all dividends in the sector being cut completely, that seems to me the most likely outcome.

[essentialinvestor] 08/12/2015 11:36

I had a stand up row with my Dad in early 2009 when he began ploughing
money in to Surrey property, told him he was significantly underestimating
further downside and had lost his marbles, well put it a little more politely.

So now he has made even more money, not being short of it to start with,
plus rental income, and my view and extreme caution now looks utterly ridiculous.

Overall markets beginning to look a little ill.

PNL is my current largest holding by some margin.

[aleman] 08/12/2015 11:17

RC2 - I don't know what MRF is saying. I have him filtered. Can't remember why. I don't filter very many. I'm fairly tolerant of opposing views as you may have gathered.

You don't seem to get it, RC2. Glencore going bust is not the doomsday scenario. The doomsday scenario is everyone staying alive and not cutting production. Production is now getting cut back and there are even signs of demand starting to turn up, perhaps thanks to very cheap oil. Someone going bust is the cherry on the cake that means production capacity gets cut back sharply just as prices start to pick up again. It would be a boost if somebody goes bust. Glencore price goes to zero and the rest jump. But the capital value doesn't really matter to me. What matters is that production gets reduced and might even go into deficit and commodity prices jump on the back of it raising hopes of dividends starting to go up again. I'm here for the long run and patient. I'll be buying while prices are down but I have no idea when and where the bottom will be.

What's your forecast for the dividend?

I've topped up actually. I have said I will continue to accumulate of the price remains low. I think these prices will look silly in 3 years and there will be plenty of dividends paid out while I wait for the recovery, even if the dividend halves. I don't think it will be quite that bad.

[essentialinvestor] 08/12/2015 10:56

Yes it's very ugly for the workforce and the many other jobs in support
services that will also go.

However it is also stripping out capacity and this is a process that is
needed to take out excess supply.

It is also what is Not happening in the oil space atm.

[rcturner2] 08/12/2015 10:52

Aleman, I have to say I agree with mrf, I do not think you see the scale of the issue here. If you are setting a 0% chance to a doomsday scenario of someone like Glencore going bust, I believe your judgement is off. Small changes in copper imports in China is irrelevant relative to the massive change throughout the world in the supply/demand dynamic.

[my retirement fund] 08/12/2015 10:49

Anglo American slashing its workforce from 135,000 to 50,000

That's a lot of people not to mention a near 4BN charge.

This is not a blip, this is not speculation is it. This is one of a number of commodity produces whom have embraced the globalisation movement of the late 90's and early 00 and now their excesses are coming back to haunt them.

In short you now have some of the largest global enterprises on the planet fighting for their very existence simply to remain solvent.

Dividend cuts will be the least of investors worries.

[aleman] 08/12/2015 10:39

I have a good record with individual companies (though plenty of mistakes still get made) . My record with sectors through investment trusts is much more patchy, although I made a great deal of capital and a huge increase in income jumping heavily into high yielding smallcaps in thw winter of 2008/9 when similar things were being said about them as are now being said about miners. I can;t know where the bottom is but, if I am buying for yield, it matters less. The historic yield here is 12% but that is clearly not the prospective yield and the price is adjusting. I'm guessing at a cut to 15p but the share price is indicating a cut to more like 8p. I think the share price is wrong. Options income will probably cover 4-5p. Will the dividend element fall from 18p to about 3-4p? It seems unlikely to me. If it halves to 9p, then you still have a 13-14p dividend with the option income added on and that's a prospective yield of about 7.5% at the current 179p. I think there is way too much pessimism out there and I think there is excess speculation ahead of the Fed meeting. Long $ and short commoodities is being reported as being a very crowded trade at the moment and there are signs that many miners are making the necessary cuts to production. A few small ones going bust will be a bonus to BRWM holdings. We must be getting close to that now.

[essentialinvestor] 08/12/2015 09:58

I read Aleman's views as over the years I have seen him make some
great calls.

As one example he saw the potential in MCB, where I hesitated because of
their net debt, fast forward a couple of years and the McBride share price has
doubled, ouch.

If you are taking a contra view on a sector timing is exceptionally
difficult.

[essentialinvestor] 08/12/2015 09:41

The market mechanism in mining is working more efficiently
to take out excess capacity than in the oil sector.

They are some huge cuts announced by AAL forced by market dynamics.
Many of the smaller highly geared operators will not be saved by
dividend and CAPEX cuts alone, so in many cases they go under.