Kohler wrote in his Eureka report on the weekend that he had bought some ARI. This is what he wrote . . .
Arrium In line with my policy of telling you what I’m doing with my own share portfolio, I’ve decided to buy some Arrium shares. The simple reasoning is that the board and management were very convincing in declaring that it is worth a lot more than the 88 cents a share that Steelmakers Australia – the Korean/Singapore consortium – was bidding. The price dropped to 68 cents after the bid was withdrawn and is now 72 cents. The steel business is obviously difficult, but I like the mining consumables business (balls for grinding mills) a lot, as well as the iron ore mine and port. I don’t think the iron ore price is going back to $150 a tonne, but it doesn’t have to for Arrium to make decent money. Boards generally sell when they get a decent offer, especially when their shareholders have been long-suffering, as Arrium’s have. But chairman Peter Smedley and MD Geoff Plummer were absolutely clear that 88 cents greatly undervalued the company. I believe them. Therefore I’m a buyer at these prices.
ARI Price at posting:
73.2¢ Sentiment: None Disclosure: Held
