Iron Ore Price, page-368

If you did the math, the SP fall is not based on the fundamental value nor quality of the firm's cashflows.
With IO having sat at $60 for a short period of time, it is inconceivable that the smart money players would not have shorted the hell out FMG. ie: UBS, before encouraging clients to do so themselves.
There are 3 reasons that fmg is trading at a price reflective of $48/t:

1. With its new debt load, its cashflows are expected to be discounted more than before, hence the greater than before depression.
2. The market is in a bloodbath, with China leading the downward charge, being the largest buyer of our produce.
3. The line up of events: Tax loss selling + Greece screw up + Chinese bubble + Global commodity price spiral

Dont get me wrong, IO will test $45 - $48 IMO. But over the nest month or so, the impact will be cushioned by the softening AUD and oil prices.

The price FMG is trading at makes it a bargain for medium term TRADERS (3 to 6 months), not Investors. It strikes me as a opportunity for the following reasons:

1. This is the first sign of a shake up in the AUD, after all the unsuccessful rate cuts, we finally see a stronger case for the AUD to be priced correctly. Given that the US will be raising rates, the AUD should persist, if not hit lowered bounds.

2. It is in our faces that the Chinese are interested in investing in fmg. It isn't out of the rubbish mill, given that they have applied to the gov. I see the announcement and failure to categorically refute such claims by fmg as a means of garnering interest. However, it does not make the fact that there are takers for the company waiting at the wings.

3.Should IO hit 48, the fundamental value of FMG, taking into consideration futures, AUD, oil etc, is 1.92. That said, our extrapolation and variables could differ vastly. A cognitively simpler means of forecasting would be to the SP against past IO price movements. This should paint a clearer picture, even if it doesnt factor for fx movements.

Cheer all and apologies for the long post.