buy, page-12

re: buy--ex date 22 feb Hi Equity,

My 'as good as it gets' comment was just to suggest that RIO might feel that prices can't run much higher. After all price has to be passed up the chain. If the end user decides he/she can do without the product or at least cuts back, then market forces re-assert themselves very quickly.

People always play the 'China' card to justify the metals boom, but China itself is still hostage to US consumer demand at this time. He/she stops buying widgets then China's growth tanks.

Anyway that aside, RIO is imo the best managed mining company going round and they have a well deserved reputation for buying low in the cycle and selling near the high. If they're not looking to buy assets, which their share b/back suggests is the case, then presumably they feel we're at least in the upper half of the cycle.

An interesting commentary in this mornings paper:

http://www.theage.com.au/news/business/rio-grilled-over-size-future-of-dividends/2006/02/03/1138958906686.html

Re the buyback itself, it is a fallacy to suggest that buybacks always support the s/p. Witness BSL which iinitiated an on-market b/back in Sept last from memory.

If something negative impinges on the company the b/back gets trampled in the rush to the door.

NB. I am not dumping on RIO which is a great company.
All I am doing is keeping an open mind.

Disclaimer: No position at this moment.