Ann: June 2024 Quarterly Production Report, page-73

"Madam, I would like to express my gratitude for your selfless generosity as a non-holding, unsentimental member of the commentariat , to attempt to enlighten us moronic Fortescue investors. You're obviously welcome to share your perspectives, there's always more to learn. Madam, however it would be of enormous benefit to understand your largesse to correct our erring investment principles. Merci tres bien Madame."

Instead of the not-so-subtle gaslighting, perhaps you should spend time considering what is objectively a perfectly reasonable question for any business owner, viz.:

What sort of financial returns are going to be generated on the capital which my company managers are deploying on my behalf? (And not deploying into the existing established business, but into totally different commercial activities for which there is limited financial precedent.)

By way of simple analogy:

If you owned a chain of successful restaurants and one day the person who you appointed to manage your restaurant business came to you and said, "Hey, Mr Shareholder. I going to take a meaningful slice of the cash flow generated by your restaurants, and I'm going to invest it in an entirely different business model (e.g., a bicycle shop or a plumbing business or an accounting practice)", the thing any self-respecting business owner would demand to know is what kind of financial outcomes can be expected from this new, pioneering business model, along with substantive explanation of those outcomes (i.e., input assumptions, degree of capital investment, operating costs, profit margins, timing, risks, etc.)

It's no different to a prospective shareholder in a business.

I come to FMG threads with a position of:

"After losing one-third of its value YTD, on a discounted cash flow basis, FMG no longer looks unambiguously overvalued. But that's only if the cash flows of the business don't get frittered away on adventures that don't generate acceptable risk-adjusted returns. So I wonder what the likely risk-adjusted returns are likely to be, and why?"

As I say, a perfectly rational due diligence approach for anyone who has respect for his or her investment capital.


PS. In a subsequent post today, I see you citing Warren Buffet's investment philosophy as a basis for your shareholding in FMG. I always chuckle when people referencing Buffet.

The fact is that capital-intensive, finite asset life businesses with negligible pricing power (which describes FMG) are the very opposite of the kinds of companies that live in Buffet's portfolios.

Also, Buffet seeks to have an understanding of the financial basis on which the managers of his businesses deploy the capital of those business. Quite the opposite to FMG where the financial outcomes of the company's capital deployment are indeterminate (or if they are known, then shareholders aren't appraised of them, which is almost worse).

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