I have been doing this for around 5 years and have made the following observations.. The market is highly irrational.. The big money will dump a share in a company that actually makes money - MTN.. and pump a share that loses money like AGL.. There is no such a thing as investing in an environment where there's free money..If you buying to hold in this environment you an idiot of note since the asset prices have been blown up due to free money..no interest.. Once this status quo changes, and like everything else in the world..it will.. Then my frends we will see massive repricing.. My advice..Trade the insanity..Make ur money and leave the worthless paper to the investors to hold.. :)
Markets are always moved by sentiment. Fundamentals just set the bar. Now the big issue here, is you are trying to compare totally different asset classes, which get measured completely differently by analysts. You can't use a PE for a mine, because they are too heavily geared to the underlying asset price (which they don't control). Mines are rated on a complex ROI structure - and even then you are taking big bets on the value of the stuff they pull out of the ground. MTN, on the other hand, can be measured completely differently - normally on a DCF model. The reason being, their product price is by and large stable (albeit dwindling).
Skaap.. Noted..But ANG has 120Million ounces of Reserves in all there 18 odd mines.. They mine around 7million a year so that gives me a useful life of +/-17... So if I am gna value the company.. The DCF method would be 17 years.. Firstly u need to go back to the start, why do we buy stocks?? We pay R100 and we expect based on dividends that it will return maybe 3-5% and we will get our ROI that way coupled with capital growth in the share price.. This is no different for a gold company..same principle..You mustn't listen to the idiots on Bloomberg and CNBC telling you stuff that don't matter.. If it takes you longer than 17 years to repay your investment in ANG, you have in fact made a loss..because after 17 years there is no ANG..Kapish..
This is a perfect example of that principle Preston.. I noted that the news that makes the market move are typically irrelevant to core business of that company... For example, MTN on brexit day was down at one stage >8%... Which genius will explain how brexit is going to affect MTN in any way or form seeing as they have no European operations??
There is very few shares, if any in the market besides maybe MTN and maybe Sasol I think offer an investment case at current share prices.. Investment is buying a share expecting a return to compensate for the risk taken..
Hali, you fixated on the 18 year life on mines .. that figure is constantly changing .. in the old days when a gold mine was a single shaft, it was true(ish) .. but ANG could buy more .. gid deeper, change as per SAMREC code etc ..
Not really that simple though - say you are sitting on a lot of ZAR - the market acts as a long-term hedge - trading does not help because while foreign companies will drop as the ZAR strengthens - the risks to the ZAR remain the same. A well-diversified foreign portfolio IS an asset
Benchmarking The Gold Majors https://seekingalpha.com/article/3989729?source=ansh $GDX, $ABX, $AEM, $AU, $AUCOY, $AUY, $EGO, $GFI, $GG, $GOLD, $HMY, $KGC, $NCMGF, $NCMGY, $NEM, $POYYF, $SBGL, $NUGT, $GGN, $DUST, $GLDX, $SGDM, $ASA, $RING, $PSAU, $TGLDX, $GDXX, $GDXS Worst than I taught, ANG only has 50million proven ounces.. Take that, multipy by FCF per ounce and minus all your debt divide by issued shares and you get to less than R10. That's the fair value of the share. If someone can give me a scientific factual view I would appreciate, for the whole chat forum to learn. Please dont give the cliche gold is a momentum bla bla. I am interested in valuation and how traders are pumping and dumping
Simon if we use ur logic of following the trend and buy ANG at R300 odd.. And the gamblers in the US decide it's time to pull the plug and take there profits then the suckers that followed that will be holding a worthless paper that will never be repaid. Like ever.. As it stands ang is gone in 10 years tops.. There is only so much gold in the ground.. Another interesting fact is 20 to 40% of all yearly gold production is being traded on a daily basis.. So that tells me its a paper market and the positions will be rolled over forever.. No actual physical delivery as it is impossible based on production.