An Investment Fund for Commodities?

bowlhead99

Well, that was all very entertaining but we now have seven 'please click spam' messages in a row on this thread. And similar effects on other threads. So I think people have generally got the message that if you see some spam you can report it, and you don't all keep needing to advertise this website feature. Unrequested advertising appearing all over the place, is... yes you've guessed it ... spam.

It is frustrating enough seeing there's a new unread post on a thread and then going there to find that it's spam. It is somewhat more frustrating to see there's a new unread post on a thread by a poster you have heard of with a 1000+ post count and so it's not going to be spam and then you go there and it's simply someone telling us that there's some spam.:eek:

So while I applaud the intentions of educating the masses, PLEASE realise that this unchecked enthusiasm has made this a more frustrating experience than it needed to be.

planteria

well said.

badger09

planteria wrote: »

well said.

And please tell us, exactly what value your contribution above has added to this thread?

bowlhead99

badger09 wrote: »

planteria wrote: »

well said.

And please tell us, exactly what value your contribution above has added to this thread?

Helped the spam-outers to see that although I was the only one to have a rant about it, other people share my views so maybe I have a point?

planteria

http://www.bbc.co.uk/news/business-11899862

Anglo American (thankfully) and BHP Billiton both pushed up a bit. i am thinking of adding to my small GlencoreXstrata holding, as would be averaging down, and i think commodities will come back, and that Glasenberg is a seriously shrewd operator.

planteria

"What are the prospects for the mining sector?

By Richard Hunter | Fri 19 July 2013

Until recently, the mining sector accounted for 15% of the FTSE 100 by value. However, declining share prices (Kazakhmys and Evraz also being demoted to the FTSE 250) have reduced this figure to 8.6%. Furthermore, Vedanta Resources and Eurasian Natural Resources could also find themselves demoted at the next FTSE 100 review in September. All things being equal, this would reduce the sector's weighting further to just 8.2%.
Why have mining shares fallen?

Fears have mounted that the strong fortunes of the miners was due to the sector encountering a commodity price "super cycle" whereby, profits and therefore share price rises had become over-inflated. There is also an acceptance that the miners were financially mismanaged in their pursuit of exploration and excavation whilst commodity prices were nearing all-time highs.

This was compounded by China's economy and its government's ability to handle any perceived slowdown smoothly. In addition, labour and energy cost increases were further headwinds.

Stock specifically, a number of acquisitions proved unsuccessful. Rio Tinto, for example, reported its first full-year loss for 18 years in February, partly due to an $11 billion write down on its acquisition of Alcan in 2007. Questions over the validity of corporate governance have also added to the malaise, with a number of the companies having headquarters abroad even though they maintained a London listing.

These pressures have resulted in most mining shares dramatically underperforming the FTSE 100 over the last year, as highlighted in the table below.
Mkt cap
(£b) Share price Yield Market
consensus
3mths 6mths 1year
Rio Tinto 41.1 -3% -17% -3% 3.8% Strong buy
BHP Billiton 39.4 -1% -12% 2% 4% Buy
Glencore Xstrata 35.7 -19% -30% -16% 3.7% Buy
Anglo American 18.7 -17% -30% -35% 4.2% Hold
Antofagasta 8.3 -12% -35% -22% 1.7% Hold
Fresnillo 7.7 -12% -42% -29% 3.8% Strong hold
Randgold Resources 4.1 -4% -24% -23% 0.7% Strong buy
Vedanta Resources 2.9 -2% -6% 23% 3.5% Cautious buy
Eurasian Natural Resources 2.7 -15% -39% -48% 2% Strong hold
FTSE 100 n/a 4.5% 6.5% 16% 3% n/a

Past performance is not a guide to future performance. All yields are variable and not guaranteed. Source: Digital Look correct as at 17 July 2013
Reasons to be optimistic

The table above illustrates that generally, analysts remain optimistic towards the sector, a conviction possibly strengthened by the share price declines. There are several reasons for this.

The global demand for commodities is not just restricted to China. Even if it was, China's economy continues to grow at 7.5%, a figure presently unachievable by most Western economies. There are a whole host of rapidly developing economies including Brazil, Russia, China, the Middle East and Mexico who still demand commodities for building infrastructure.

The mining companies have also recognised their financial plight and most are initiating cost control initiatives. Rio Tinto announced this week that it is targeting a $750 million reduction in exploration and evaluation spend in 2013.

The sector looks set to generate huge amounts of cash and with investor returns in mind (following some shareholder pressure), many of the miners have accelerated the rate of dividend growth. As the table shows - partially also boosted by the share price declines - many of the yields are in excess of the returns currently available in other asset classes although they are variable and not guaranteed.

The cash generative nature and future prospects for the sector, could point towards further Merger and Acquisition activity. Whilst not all have succeeded to date (the failed Rio Tinto/BHP Billiton merger being the obvious example), there was the success of the Glencore Xstrata merger in May this year, which resulted in a combined behemoth with a market capitalisation of £35.7 billion.

Lastly, and from a wider perspective, mining stocks could also provide investors with a hedge against inflation (as and when it comes). Historically, commodity prices increase with inflation, thus directly boosting the profits of mining stocks.

For all its recent woes, I believe there are glimmers of light for the mining sector and market sentiment is slowly becoming more positive. However the sector itself remains significantly further up the risk scale. Investors with a long-term horizon may be prepared to take a view on the continuing evolution of smaller economies worldwide."

http://www.hl.co.uk/shares/share-tips/richard-hunter-weekly-comment/what-are-the-prospects-for-the-mining-sector?utm_source=Silverpop&utm_medium=email&utm_campaign=E00IC%20-%20Investors%20Chronicle%20email%2077%20%281%29&utm_content=RH%20Article&theSource=E00IC&Override=1

planteria

i am happy holding Anglo American and Glencore Xstrata at the moment, and may add. if i wasn't holding any miners, i'd be buying.