Good post ColinchiI am in CDG waiting for planes...again..so I...

Good post Colinchi

I am in CDG waiting for planes...again..so I will chip in again quickly

Mkt sentiment is what it is. Just have to live with it.

But lets have a look at what some so called informed investing guys say, and this is on the public record. The perception is that the Oz investor is doom and gloom across all sectors, and basically undervaluing the ASX stocks... is a solid macro view.

This has created buying opps for the sophisticated investors (read companies, hedge funds), who are really sophisticated (its how they earn their $$$$.). They will just creep along, buying, acquiring stock, without distorting price (that much), or keeping this to a min, and then suddenly expose an acquisition bid, preferably.

You can see facets of this in some of the acquisitions of recent whereby Oz companies have been bought cheaply. Just have a look at some of the buyouts that have happened in beverages and think about some of the buyouts which are underway )or will happen in other market sectors in the ASX (Graincorp. Really the Oz market is a bit isolated, fairly naive and good value for sophistaicted investors.

Oz ASX companies seem to be price takers and not price makers (except some resource stocks which have SCALE..BHP, RIO etc..more later about this).

In the world now, its hard to put your finger on sectors where real organic growth WILL occur, due to the GFC version 6 or whatever it is, fiscal cliffs, inept politicians, media circus, banks finally being called to account (love to see the fines go up an order of magnitude to what they really should be )..etc . Its easy to see where there is very very cheap debt, probably as good as it has ever been on a global scale. So if you can borrow to buy some uunderavlued asset this could be a (high) growth path in todays world?

Recap. Debt is globally cheap. Org growth...who knows...but probably not going to excite the market But the company must drive the SP higher. How do they do this?

So hence, the sophisticated investor, who knows SCALE is paramount, and they want this for as cheap as possible, are getting interested in SCALING opportunities, of various flavour that compliments their business. But there is nothing now forcing them to play their hand. Things will change, and for the sake of brevity, this will change in 2013, and the smarter guys will move sooner than the dumber guys.

So what has this got to do with AMX????? Have I completely lost the plot???

Well AMX has this thing called SCALE. Focusing on 5 kms of strike length of a 150 km long prospective structure is at YOUR peril, dear would be AMX investor. The SOPHISTICATED investor maybe having a different view in deed.

When sophisticated investors launch a take over bid they like to have a few things on their side.

1. They like to go to the max they can in terms of shareholding before they have to formally declare a takeover (this is about 20% in Oz). Its interesting how they do this, but enough.

2. They like to have the 3 months moving average of SP of the prey at a low(est) value, so when their offer which is generally (rule of thumb)30% above the 3 month weighted average, comes in, it looks good. Share holders are despondent and heading for the doors.

Point 2 can go before 1.. and there are more details, as this is a very interesting part of the value creation attempt. In fact it is a critical point. Or a tipping point.

So consider

1. Does a sophisticated investor think AMX has scale...?
2. What is the long term margin on AMX over lets day the envisaged life of mine (I guesstimate 10-15 years), hence what is the return on Capital, Return on Equity? this is of the 5 kms of the 150 kms..or 3.3 % of the mineralized strike extent of the structures,
3. What is the reasonable potential of the other 96.7% of endowed structure worth.

It is extraordinary how the investor can be so solely focused on valuing the AMX company based on 3.3% of the potential asset value?

But right now the world is extraordinary?

But it will not always be this way.

Good luck guys....plane is set to go.