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How long can you hold on?, page-23

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marri

2,397 Posts.

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12/02/16

13:40

Post #: 17005432
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Originally posted by fitnfam ↑

Marri,
Ever bought a can of peaches on special at 89c to see them on sale next week at 69c.Then the next week apricots are 59c.what bargain do you want in comparison to what and at what price is it one?
What if you just don't like apricots at any price??????????

I'm one of those who bought ARI at 30c and saw it rise to $1.70 before its markets altered its income outlooks and the Board destroyed their and the Companies market credibility and value.
It was a raving buy back then at 30c and owed a truck load more money.
The assets I valued ARI with haven't diminished in value although there is much that is CURRENTLY worth little,that was producing a handy income at the time,that I had placed little investment value on at the time fortunately.
I am in reality only interested in Moly-Cop and its ultimate ownership and upside from its global spread.

Currently ARI market value is worth around in each segment it sells.
$15 a ton for every ton of IO it sells.
or $75 a ton for every ton of steel it makes
or $150 a ton for every ton Moly-Cop sells.
I'd call that triple leverage to considerable upside in three seperate market segments.
It is rather unlikely any of these markets will deteriorate further.

Moly-Cops leverage and Cash-Flow ongoing from this year sufficient to Pay The TOTAL interest and reduce ARI debt at around $US100-150 a year on its own.

Large businesses have the advantage and disadvantage of size.Just to take one angle.
ARI can either free up considerable cash by rising stock turn or consume considerable cash by increasing stock.We are talking maybe $100 - $200m.
Moly-Cops stock turn is up and less volume at higher value means 20% drop in shipping for each customer =======CASH
ARI's arc furnaces are running amuck down the road from customers in Sydney and Melbourne.
One can assume Stock turn up=======CASH
ARI's arc furnaces have increased production and scrap costs have fallen faster than the steel price so
MARGINS UP along with demand ======= CASH
ALTA STEEL in Canada will be doing the same - so expect an extra Moly-Cop boost =======CASH

Balanced against those units consuming cash.
We have seen direct action taken to stem ongoing losses in assets held for sale for FAR FAR too long in steel.
Values change and so do comparable bargains rise and fall in value.

DYOR + DYODD Would I have been better swapping ARI shares at 80c for FMG at around similar values - of course - but I didn't.I just don't trust one horse races.One can argue that better board management and decision making here will take the ARI value back there.

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Fitnfam
Thanks for your thoughtful post.
The problem (as I see it) is that the assumptions you make may well be off the mark.The most common problem for fundamental analysts is that they must make assumptions all of which are critical to their final valuations.Small changes in the assumptions made frequently have a major influence on the bottom line.
So,you have your assumptions and other analysts have theirs and the final valuations are very different.Morgans (or some other broker) values ARI at 8 cents for example.Are their methods worse or better than yours?Who knows.What we do know as a fact is that The Market values ARI at 5 cents or so.

ARI Price at posting: 5.2¢ Sentiment: None Disclosure: Not Held
2 Upvote

0 Great analysis

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