Not many posters appear to be paying a lot of attention how much FFI hopes are built in to the current SP. While it's not an easy task to estimate as there is no history, the answer would give some understanding to two main questions that were raised recently.
1. Why some brokers targets are so far away from todays SP
2. Why shorters keep hanging around
It's so easy to call them jokes, idiots etc, but it's a silly approach. Shorters and brokers are way more experienced than the average retail investor and have tones more money to their disposal.
1. After the simple analyses I came to the conclusion that $5-$6 of FFI is already in the SP. So IMO and if we look at a short term, the SP is overpriced already. While we hope that the hydrogen story is the company's future, it is far from being certain and there are multiple risks associated with massive capital investments required to move it from ground ZERO( todays position) to the profitable adventure. The relationship between the IOP and SP has become less relevant and it looks like it's an ongoing trend. The brokers with low target price simply take the FFI component away and assess the FMG as the iron ore miner only. This is a conservative approach, but it hedges the potential downside.
2. FMG is a very volatile stock. In fact, if I am not mistaken and correct me if I am wrong, it's the most volatile stock in ASX50. We recently observed the crazy move from $26 + to $14 and back to $20+ within a very short time frame. Shorts love the volatility. That's how they make money. With all the respect to Aceboy and his technical analysis, they made a lot of money on the way down and I do not blame them in trying to capitalise on the current overpriced SP. I am personally the fundamentals man and do believe that the crunch is coming . The SP will pick soon and the down tern will begin.
I could not resist $5 profit and have sold out at $19+. ( probably too early) and wll wait for the SP to come back to a lower price($16-$17) to get back in again.
Iron ore price, page-42490
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Last
$17.34 |
Change
0.520(3.09%) |
Mkt cap ! $53.38B | |||
| Open | High | Low | Value | Volume |
| $17.31 | $17.51 | $17.00 | $309.6M | 17.18M |
Buyers (Bids)
| No. | Vol. | Price($) |
|---|---|---|
| 1 | 300 | $17.33 |
Sellers (Offers)
| Price($) | Vol. | No. |
|---|---|---|
| $17.35 | 28897 | 5 |
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| Last trade - 16.10pm 16/08/2024 (20 minute delay) ? |
| FMG (ASX) Chart |