Target $18.72, page-10460

Preston I agree that's why it's so important to know the underlying value and how it rises or falls marginally relative to the often excessive movement in price ..."from way under value to way above value."

However what is the value of WHC ...well the Book Value is $6.30 and the intrinsic value $23.65 ...while the net present value is $35.76....Using the valuation presented by 10 analysts the bottom price projection for one year was A$6.87 the highest value A$12.36 and the average price projection is A$9.28.

In conclusion the present price is much cheaper even than book value and usually shares are priced to at least twice book $12.60

So using all value methods the share price is very cheap compared to a number of share valuations ...The question is why is WHC so cheap when compared to all these tried and tested valuations methods?

The answer is Sentiment ....Sentiment plays a major part in any price...and often is unconnected to the value or the price ...Fund Managers during this period of climate change do not want to be criticised by shareholders for being involved in coal mining...so many on fear of criticism from their Board don't buy.

During this Green period many shareholders believe investment should be in renewables....like wind generation by turbines etc ..and not in polluting materials such as coal...So again many Fund managers don't buy for fear of shareholder criticism.

At present investors are also unsure about the earnings or the debt position with the mines bought from BHP and are waiting until one years earnings come through and where the debt is going to be? Indeed despite the huge cash flows and the funds coming from the Equity sales ...concern on debt and earnings remains!!!!!

Investors have been told that the investment of over A$1.5 billion dollars by the Japanese steel Companies in Blackwater is irrevocable but they won't be happy to invest in WHC until the money is in the Bank!!!!

Added to all these short term worries is the volatility in coal prices and how slow will demand get from China and when will demand from India pick up...where will the price be every day ????

Indeed many investors want an almost risk free investment!!!! ..Well I'm sorry to say when that day arrives when many of the risks have been radically reduced ...these same potential investors may be looking at A$9+ as the start of the very strong upward move and of course they will now say it's far too expensive!!!

It is because investors don't do their homework on value that they buy and sell on the drive of their emotions ..one moment confident and greedy the next panicking to get out with fear that is rising with every second to a desperation level and these emotions can flood the brain back and forward within minutes !!!! Now it's clearly understandable that acting on emotion is not a sensible way to invest!!!! However From experience dealing with clients it's more often their behaviour than not!!!!

There is "No Gain without Pain"...and Worry ,Risk and Pain are the only Way to any Profitable Gain....but it is clear that Emotional Purchasing and Emotional Selling cannot be part of
any objective process in the investing equation.
When emotion is allowed to enter the equation ...investors buy on the way up...often at the top ...and sell on the way down often at the very bottom....an objective value investor will do exactly the opposite...and should only let value dictate his activities.


To quote Charlie Monger .."once you have done your homework ...anybody investing in stock markets must be prepared for a 50% pull back in price ..if they cannot accept that they should not invest."


As we can see from the volume of WHC traded today ...Fund Managers and others have not done their homework and are acting and reacting on emotion with desperation to get out....but for me being Lazy in Quality ....such fearful behaviour ...not based on value ..will always offer opportunity.

All The Best to All.