STTCOMP SGM FA Long Sims Metal Management MC $2B SP $9.84 SGM is...

STTCOMP SGM FA Long

Sims Metal Management
MC $2B
SP $9.84


SGM is a big business with lots of moving parts.... I do not understand it, so my analysis is general at best. A month ago SGM released this profit warning and the SP duly dropped. The company has suffered collateral damage in the tradewar. Long term I see SGM as a growth stock and I took a small position a couple of weeks ago with the view to gradually build a free carry position by trading the volatility.

I see the partial easing of trade tensions as a reason for SGM's price to recover a bit. Prior to the profit warning the SP was trading around $12.75 so it is a 20% drop in 4 weeks... a fair bit of safety in the trade and it's reasonable to expect 5% to 10% improvement in a similar time-frame.

This is a FA tip but below is the 3 year chart... which shows SGM has been comfortably range trading between $9 and $12 for most of this year [all of which has been tradewar affected] and in the 2 prior years was clearly in a rising trend.



Disclosure: I hold a modest parcel of SGM