#154962
Postby Pastcaring » July 25th, 2018, 12:38 pm
Ah,BHP,the big Australian.The company seems to be proof of buy a company that an idiot can run,because one day an idiot will be running it
As they are large in the state I live in ( Western Australia),the noise is non stop.Western Australia will probably all be exported overseas,so many holes in the ground.Luckily it is big,around twice the size of Europe,but I could be wrong there .
I don' t own them,very capital intensive,long lead in times for projects.They can only get money basically when a boom is on ,by the time everything is built the boom is over.
The huge boom we had here when the rest of the world was dodgy ,that was a laugh.From memory right at the top of the market they launched a hostile take over bid for Rio.Around $150 Billion. The board thought they were worth that ,the board of Rio thought they were worth far more than that. I don' t think they are worth $150 billion in market cap together now.
Rio shot themselves in the foot buying Alcan I think it was as a poison pill.Forty billion $$,shortly after written off as worthless I think.
BHP luckily dodged a bullet,down to good luck rather than good management.Which board of directors was the dumbest?
However,I have looked at them a few times over the last 40 years.The thing that surprised me was how good they have been in the long term,from around 50 cents a share in 1980 to whatever they are worth now ( $33 ? ).,No good to me though,they don' t have a DRP which always stopped me buying them.
The noise when oil and copper,and iron ore rise in price is deafening here.I think they went up a good bit today,commodity prices rose last night (WA time ).
The money they bring in is unbelievable,fortunately it is more than they can squander . Buying Billiton,shale oil,potash in Canada,down here HBI plant in Port Hedland,Olympic dam north of Adelaide,it was planned to be the largest copper/gold mine in the world.The takeover of WMC,WMC and Billiton are now basically South 32.
A huge nickel mine on the south coast here,houses built for the workers, $4 or 5 billion wasted,I think they closed it around 6 months after it was open, price of nickel dropped drastically during build.
BHP is good to buy when everybody has the chicken little suit on saying the sky is falling.After the Japan bubble burst in 1990 WA was a wasteland,all miners basically went under or begged to merge with BHP.China came to the rescue.What a boom it was,there wasn't enough labour in the world to fill the jobs going begging,people queing up 100 deep to rent houses.
Around 2 or 3 years ago BHP was flatlining at around $15,that was the time to buy it,chicken little suits were everywhere.If you wait and can get it under $20 that's the time to buy.Then you might have to hold it for 5 -- 10 years,time the cycle.
The problem you will have is,have you got the balls to buy them then,they have dropped 30-- 40%.The crowd are running round saying don' t buy them,company XYZ went bust, company ABC cut their dividend,BHP will do the same .
Hold BHP for the long term and it is hard not to make money,everybody needs commodities.Don't buy them at $33 unless they are for momentum trading,even then think long and hard about it.
If you worry that you might buy something and it falls,don' t go anywhere near stock markets,you have to be prepared to lose 50% or more of your money.They will fall,but I have no idea when.Usually when everybody is saying the boom will never end,that is the time to find comfort in dividends,or get out.