UK Stockmarket 2009 and beyond

sabretoothtigger

Lloyds arent likely to get nationalised. They have alot of latent profit locked up in capital that stays true so long as housing does not half in price and/or we see defaults.
Its been a screw up but mortgages are still a profitable business, they only need to do normal business to outperform which means paying off all that debt

Im not surprised they are blocked but I remember they paid a scrip div before that rule went through with EU. I expect them to pay 1p or something tiny as soon as they can, the reason being is that being valued by the market has a practical worth to them.
Some debt is issued relative to equity value conversion etc The sooner they are viewed as reliable the better so I expect them to try and show good faith to any investors

market clearly thinks

markets arent thinking that great at the moment more reacting which has alot of money crowded to one place

some BHP Billiton.

At this price these miners are almost dividend stocks. They can pay out, make a profit on commodity price drops even from here.

The miners were already running a discount to the spot price as no one ever expects the highest prices for years to stay there, a drop just confirms some of this.


Oil production is running at the highs already apparently compensating for Libya

gadgetmind

sabretoothtigger wrote: »

I expect them to pay 1p or something tiny as soon as they can, the reason being is that being valued by the market has a practical worth to them.

That's my hope. My LLPC will be paying over 10% (at my purchase price) once they resume, and NWBD isn't far behind. At today's prices, I'm tempted to buy more.

At this price these miners are almost dividend stocks.

My wife holds them unwrapped as a long-term dividend play. 3.5%+ pa , hopefully growing faster than inflation, give it a decade and it's happy days.

Plans. I have them.

amictus

I have been watching BLT and RIO recently but am struggling to work out if there are any fundamental differences between their assets/operations that might swing my decision... any thoughts?

VED is another that looks incredibly cheap at the moment...

http://www.fool.co.uk/news/investing/company-comment/2011/09/20/a-growth-company-at-a-value-price.aspx

I'm a little concerned there's something dodgy about this one... but I can't put my finger on anything specific! Is the majority ownership by a single director something to be concerned about?

JamesU wrote: »

For basic miners themselves, my favourite is db-xtracker XSPR. Still approx 25% RIO weighting, checked recently.

Thanks for pointing this out. It makes for a very attractive option given my current indecision. Are there any similar ETFs or ITs I should consider?

worldtraveller wrote: »

IMHO I see a lot more downside to commodities yet.

With P/E ratios of ~6 they have to be bottoming out soon... right?!

amictus

Taking a completely different approach, Strategic Natural Resources looks very interesting...

http://www.proactiveinvestors.co.uk/LON:SNRP/Strategic-Natural-Resources

Has anyone been following SNRP?

sabretoothtigger

PE is historic, when commodity prices fall people fear it will greatly affect the PE in future.
A mine will only sell gradually anyway so its hard to say what their average price realised will be.
Especially if production is erratic like POG has suffered and some think missed the best prices in gold


VED is owned largely by the guy who has run it for 30 years and whose family has always operated it. I think its a good sign when companies have large holdings by the people who run it, HOIL is another one.
The VED guy just bought 10m worth of its shares but he is also wanting to finance 6bn at some point, its a very ambitious company I think

BLT has oil and RIO doesnt. They are both largely iron ore miners I think but RIO will suffer more when oil prices rise
BLT also bought Natural gas field which is cheaper then oil. I prefer them but I think RIO is listed as slightly cheaper

Has there been a BP (LSE: BP)-style environmental disaster?

Not quite but they do get in trouble and I think the shares are avoided by a few pension funds


FTSE is due a nasty fall tommorow, VED will be 3 digits. Sept was end of the quarter, its possible its not as serious just yet as the price shows


Bright spot in the gloom to look at I think might be WEIR who have not really been cheap enough to buy previously

amictus

sabretoothtigger wrote: »

PE is historic, when commodity prices fall people fear it will greatly affect the PE in future.
A mine will only sell gradually anyway so its hard to say what their average price realised will be.
Especially if production is erratic like POG has suffered and some think missed the best prices in gold

OK. So the lesson is that historic P/E ratios for miners aren't particularly relevant given the current situation with commodity prices?

sabretoothtigger wrote: »

VED is owned largely by the guy who has run it for 30 years and whose family has always operated it. I think its a good sign when companies have large holdings by the people who run it, HOIL is another one.
The VED guy just bought 10m worth of its shares but he is also wanting to finance 6bn at some point, its a very ambitious company I think

sabretoothtigger wrote: »

Not quite but they do get in trouble and I think the shares are avoided by a few pension funds

OK that makes sense. Profitable, but probably not an "ethical" investment!

sabretoothtigger wrote: »

BLT has oil and RIO doesnt. They are both largely iron ore miners I think but RIO will suffer more when oil prices rise
BLT also bought Natural gas field which is cheaper then oil. I prefer them but I think RIO is listed as slightly cheaper

I found some more details on Morningstar...

http://tools.morningstar.co.uk/uk/stockreport/default.aspx?tab=0&vw=an&SecurityToken=0P00007OTS]3]0]E0EXG$XLON&Id=0P00007OTS&ClientFund=0&CurrencyId=GBP

http://tools.morningstar.co.uk/uk/stockreport/default.aspx?tab=0&vw=an&SecurityToken=0P00007O0M]3]0]E0GBR$$ALL&Id=0P00007O0M&ClientFund=0&CurrencyId=GBP

In addition to the product differences you mentioned, RIO seems focused on China, whilst BLT appears more geographically diverse with higher proportions in Australia and Other Asia. Does this have any bearing, do you think?

sabretoothtigger wrote: »

FTSE is due a nasty fall tommorow, VED will be 3 digits. Sept was end of the quarter, its possible its not as serious just yet as the price shows

Thanks for this. Also, I notice VED have an announcement scheduled for the end of the week, so I may well see what comes out of this before I decide on BLT/RIO/VED/XSPR.

sabretoothtigger wrote: »

Going to buy tomorrow, can someone recommend me a good Gold or miners fund for my SIPP ?

Would you mind if I asked which (if any) you chose to go with?

sabretoothtigger wrote: »

Bright spot in the gloom to look at I think might be WEIR who have not really been cheap enough to buy previously

WEIR is also on my watchlist. Questor is very keen on this one. I wouldn't mind a bit of BG action too...


Finally... any thoughts on this?

owains wrote: »

Taking a completely different approach, Strategic Natural Resources looks very interesting...

http://www.proactiveinvestors.co.uk/LON:SNRP/Strategic-Natural-Resources

Has anyone been following SNRP?

cloud_dog

owains wrote: »

Taking a completely different approach, Strategic Natural Resources looks very interesting...

http://www.proactiveinvestors.co.uk/LON:SNRP/Strategic-Natural-Resources

Has anyone been following SNRP?

Yes.

They have lots of pluses, lots of resource, off-take agreement. Still dependent on some things, like Transnet capacity etc.

IronWolf

sabretoothtigger wrote: »

VED is owned largely by the guy who has run it for 30 years and whose family has always operated it. I think its a good sign when companies have large holdings by the people who run it, HOIL is another one.
The VED guy just bought 10m worth of its shares but he is also wanting to finance 6bn at some point, its a very ambitious company I think

Can be a good thing or a bad thing, you have to look at how they've behaved in history. I remember a recent example of a company which paid a "special dividend" which didn't really make sense, esepcially as some of it was funded by debt of the company. Very likely the director wanted some money so just got the company to pay him a large dividend.

But most of the time it's a good thing, as someone that owns a large stake in a company is far less likely to make bad or risky decisions. CEOs that have no stake tend to just make stupid decisions to get their short term bonuses, like overpriced acquisitions.

gadgetmind

IronWolf wrote: »

I remember a recent example of a company which paid a "special dividend" which didn't really make sense, esepcially as some of it was funded by debt of the company.

Well, dividends can only be paid from retained earnings, so the debt can't have been too bad.

Very likely the director wanted some money so just got the company to pay him a large dividend.

Naaa, they'd have done a share buyback to boost the value of their stock options!

But most of the time it's a good thing, as someone that owns a large stake in a company is far less likely to make bad or risky decisions. CEOs that have no stake tend to just make stupid decisions to get their short term bonuses, like overpriced acquisitions.

I also check director holdings, but historically there is little evidence that it makes a massive difference.

zildjian

gadgetmind wrote: »

Well, dividends can only be paid from retained earnings, so the debt can't have been too bad.

Companies can easily take out a loan to pay dividends. It is definetely done with a fair few companies in USA but not common here. So i wouldnt say its only retained earnings. (unless theres a law that i dont know about).