Hi Guys,
Been reading all of your posts with interest.
I had a large holding 800,000 via a margin loan and sold just over 400,000 at an average of $9.00 (kicking myself, but got greedy before and it backfired)
Used funds to pay down debt and help my daughter with their home loans.
The 370,000 I still hold provided $228,000 so far this year in fully franked dividends more than enough to cover the margin loan interest. If they pay around 90.0 cents to $1.00 I will be ecstatic, anything more than that over the moon. Bringing the full year dividend to around $550k to $600k.
The pain over the last decade is now a distant memory thanks to FMG, Twiggy, Nev Power and Elizabeth Gaines.FMG continue to outclass their competitors on all metrics.
They are not diversified, big deal at the moment. With so much cash flow post-infrastructure and capital commitments, they can diversify, buy an existing miner etc.
IO price on average over the next five years of $60 to $80 would still mean huge profits.
St George Margin Lending have made a shit load from me in interest, currently 4.50%, dividends more than cover the interest, only need just over 30.0 cent dividend each year to cover the interest on the loan ($3.0 million).
Had a brain wave and called St George and asked them to review the interest rate and reminded them of the interest paid over the last decade.
Came back to me next day and reduced the interest from 4.50% down to 2.70% (unbelievable totally shocked), now all I need to cover the annual interest is a minim 21.0 cents net dividend payment each year (no-brainer in my opinion)
I own commercial property and have hassles with tenants, vacancies etc and get taxed at 47.00% (no franking credits obviously).
FMG no hassles, vacancies, tenants, land tax etc. Very tax effective income investment with upside with future capital gains.
Over the years I have watched FMG become the lowest cost producer, use innovation to increase efficiencies and costs, invest in energy to further reduce costs, commission new mines and REDUCE DEBT. Could we ask for more?
Those that want to sell, think gain. Where will you put your money that will earn you fully franked tax effective dividends over time plus opportunity for upside in the SP (capital gains).
The wife winged about the margin loan, so I sold to keep her happy, opportunity cots of over $3.5 million had I held and sold around $17 to $18 (me being greedy again).
All the banter is about Vale and increased production. Vale management would be stupid if they go full steam to increase production and exports to China. The IO price would fall and they would receive less.
Based on their high grade ore, with the IO price above $100 plus, their revenue would be more or less the same but with increased profit margins.
Remember when BHP and RIO to stick it up FMG increased production to lower the IO price, backfired on them. Why mine the stuff to sell at a lower price and reduced profits.
I could be wrong in my simple analysis and assumption, let me know.
In any event I will hold FMG shares and not sell even one share, the kids will inherit them and hopefully they will also hold them for tax effective dividend income stream.
Good luck to the long term shareholders like me who rode the ups and downs and now are being rewarded and will continue to be rewarded.
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